I Like My Funds Extra Slushy

Readers of this blog are aware of my fixation on transparency. Readers of my other blog, Again? Really?, know that I am particularly offended by slush funds, large amounts of taxpayer money redirected by government entities to surreptitiously benefit pet causes or personal gain. The slush finds of a local government might be in the thousands or possibly a million dollars or so. It takes the federal government to create a billion dollar boondoggle.

Insured Americans will be paying a new fee as of October 1, 2012. Anthem Blue Cross sent a warning announcement last week to advise us that they will be adding the charge to our bills. “The Affordable Care Act (PPACA) established the Patient-Centered Outcomes Research Institute (PCORI) to explore the effectiveness, risks, and benefits of medical treatments. This study is also known as Comparative Effectiveness Research (CER). PCORI is a nonprofit, nongovernmental organization supported by a trust fund that is financed in part by fees from health plan insurers.”

The fees are $1 per covered person in the first year. $2 per person in the second year. And after two years? The $2 per person per year will be adjusted for medical inflation.

Bureaucracies, in general, like acronyms, but the combination of acronyms and money make for a government love affair.

Comparative Effectiveness Research came into prominence as part of President Obama’s American Recovery and Reinvestment Act of 2009. $1.1 Billion was allocated.
  • $300 Million for the Agency for Healthcare Research and Quality.
  • $400 Million for the National Institutes of Health.
  • $400 Million for the Office of the Secretary of Health and Human Services.
This wasn’t a beginning, middle and end. This was seed money.

The Department of Health and Human Services (HHS) explained that CER “compares treatments and strategies to improve health. This information is essential for clinicians and patients to decide on the best treatment. It also enables our nation to improve the health of communities and the performance of the health system.”

Gosh that sounds good.

According to the National Cancer Institute, CER has both its proponents and detractors. One key issue was brought up by Jeffrey Kindler, CEO of Pfizer, who wondered whether the results from Comparative Effectiveness studies would be “automatically linked” to insurance coverage decisions. In other words, will healthcare in the future become one size fits almost all and too bad about the rest.

In his paper “Comparative Effectiveness Research and Kindred Delusions”, Norton Hadler, MD expanded on the difference between efficacy and effectiveness.

I have nothing to add to that debate. My only question is “How Much?” How much money, your money in taxes and your money in fees, are we spending on this and who is getting it?

Billions of dollars funneled through the Department of Health and Human Services became even more of an issue last week when the Government Accountability Office (Yes, that GAO) found that the Obama administration was wasting $8.3 Billion on a questionable Medicare program.

As part of a “Demonstration Project”, HHS has created an experimental program to study the effects of money on the insurance market. This experiment is to award bonuses to high quality managed care Medicare policies known as Medicare Advantage. High quality, like intellectual honesty, was one of the first victims of this scheme. To make a long story short, the money, most paid out in the next three years, covers the cuts that were made in these popular programs by the President’s health care law. The PPACA took money away, but Health and Human Services put the money back in through the back door.

The independent Medicare Payment Advisory Commission panned the misdirection. The Republicans think that this looks suspiciously like a re-election driven decision. The New York Post didn’t bury the lead. They labeled it a political slush fund.

What we are talking about is money. We know where it comes from, US. What we don’t know is where it is going and why. Unlimited funds funneled through Kathleen Sebelius and her politicized Department of Health and Human Services are sure to arouse suspicions. Add to this an $8.3 Billion experiment and you have the potential for a real problem.



Insurance, building codes and rebuilding after a disaster

Q: Part of my home burned, and I'm repairing the large burned section of the home. County building codes require upgrades from what was originally there. Does my homeowners policy cover this added expense?

A: It depends. If your policy has what's called "law and ordinance coverage" -- it's often referred to as "L&O" or "upgrade coverage," then yes, your policy would address the added costs to make the required upgrades.

As a precaution, ask your agent or insurer if you already have the coverage or if you can add it to your policy.

Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.

Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)

Insurance and fallen trees

Q: Will my insurance pay to repair my neighbor's home if my tree falls on his home?

A: It may not have to. Typically, a homeowner's own insurance coverage pays for such damage, unless you were negligent and your negligence caused the tree to fall.

Say the tree was obviously diseased or damaged and posed a clear risk to your neighbor's home, for example. In such cases, you could be found negligent and your insurer would cover the claim.

Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.

Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)

Installing R packages without admin rights on MS Windows

Photo: Markus Gesmann
Is there a life outside the office?
Photo: Markus Gesmann

It is not unusual that you will not have admin rights in an IT controlled office environment. But then again the limitations set by the IT department can spark of some creativity. And I have to admit that I enjoy this kind of troubleshooting.

The other day I ended up in front of a Windows PC with R installed, but a locked down "C:\Programme Files" folder. That ment that R couldn't install any packages into the default directory "C:\Programme Files\R\R-X.Y.Z\library" (replace R-X.Y.Z with the version number of R installed).

Never-mind, there is an option for that, the libs argument in the install.packages function. However, I have to use the same argument also in the library statement then as well. Fair enough, yet it is more convenient to set the directory somewhere globally.

First of all I decided that I wanted to install my R packages into C:\Users\MyNAME\R, a folder to which I had read/write access (replace MyNAME, or the whole path with what works for you). The R command .libPaths(c("C:\\Users\\MyNAME\\R", .libPaths())) will make this directory the default directory for any additional packages I may want to install, and as it is put at the front of my search path, library will find them first as well.

The next step is to enable R to execute the above command at start up. For that I created the R file C:\Users\MyNAME\R\Rconfigure_default.R with the following content:

Finally I added a new shortcut to Rgui.exe to my desktop with the target set to:

"C:\Program Files\R\R-2.X.Y\bin\i386\Rgui.exe" R_PROFILE_USER="C:\Users\MyNAME\R\Rconfigure_default.r"

Job done. R will happily install any new packages locally and find them as well when I use library or require. For more information see also the R FAQs.

It Sucks To Be Poor

It sucks to be poor. It is nobody’s goal in life to be poor, to wonder how you are going to feed your family, keep a roof over your head, or to be unable to afford the most basic of needs or wants. I’ve been poor, not homeless or destitute, but close enough to appreciate the fear and uncertainty that comes with an overdrawn back account and a baloney and tater tot dinner.

I’ve never received government assistance, not even unemployment compensation. So I have never had to check in with a government employee, told where I could live, or what groceries I could buy. And when I needed to take my children to the doctor, I’ve always had my choice of all of the pediatricians in town.

The poor have Medicaid.

Medicaid. Fraud ravaged. Doctor hated. Taxpayer resented. Medicaid. And no one likes Medicaid less than the people it was designed to help.

There are 1.7 million Ohioans receiving state funded medical assistance. Ohio is revamping Medicaid, again.

Eleven companies recently participated in a complex bidding process to win a piece of this action. Five won the opportunity to provide coverage. Five lost and are filing appeals. One, Anthem Blue Cross the #1 insurer of Ohioans, shrugged off its loss and walked away.

Medicaid, the State of Ohio’s single payer health care system for the poor, appears to be mired in controversy. As reported in the Columbus Dispatch, there are charges of more than just irregularities, mistakes, and a shocking lack of transparency. There may have been actual fraud and false statements on the applications.

Some of the companies that were shut out contacted London based Barclays to analyze the process. They found “Scoring results indicate considerable inconsistencies among bidders…Scoring processes are always complex, especially in markets this large, but typically not to this degree.”

In a rush to save $1.5 Billion (real or imagined) in the next two years, the state may have selected up to three vendors thanks to applications enhanced with inflated statistics. Though the process was supposed to “improve the coordination of care for 1.7 million recipients and improve health”, it may, instead, have been just one more arbitrarily awarded government contract.

It is one thing to entrust your children’s health to the lowest bidder. It is even worse to be herded to a facility or provider that lacks the integrity to compete fairly. But when you are a football, when you are tossed from one player to another, you don’t have much say in the process.

But then again, it sucks to be poor.



Insurance: When a car is burglarized

Q: My clothes, camping gear, camera and guitar were stolen from my car. Will my auto insurance pay for these things?

A: Maybe, but there may well be dollar limits for things like clothing, sports equipment, etc. that might be incidental to an outing or vacation. Your auto policy would specify those limits. (We had an odd fraud case a couple of years ago involving a man who kept claiming that his $33,000 collection of silk neckties was being stolen from his car.)

For things that are generally considered personal property, rather than auto-related property like a spare tire, jack, or roadside emergency kit, you might be able to file a homeowner's or renter's insurance claim. Talk to your agent or insurer -- and think about your deductibles. If you have a high deductible, it may not be worth it to file a claim for a small loss.

Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)

Dogs and insurance

Q: Am I covered if my dog bites someone else visiting my home, or when we're at a city park or campground?

A: Generally yes. Your homeowners policy will typically cover the incident at home or away from home, but once your insurance company knows that your dog caused an injury, the company may take a second look at you as a risk. The company may not want to continue coverage, or could raise its rates, since it's hard to guarantee that the dog will never bite someone again.

Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.
Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)

From the Guardian's data blog: Visualising risk

The Guardian published a nice summary and link collection of an interdisciplinary visualisation workshop hosted by Microsoft dedicated to visualising probability and risk. Check it out here.

OECD better life index
The links I found most interesting were those to the pages of Gregor Aisch and Moritz Stefaner. You may have come across their work in the past, as Moritz worked on the OECD better life index and Gregor contributed to the Where does my money go site.

Job openings: Actuary, financial examiner, analyst, technician, receptionist

Due to retirements, a promotion, etc., we have several jobs that we're looking to fill. It's been quite a while since we've had this many openings.

The jobs are listed below, along with a few highlights. For the official job listing and specifics, including duties, salaries, required qualifications, etc., please click on each job's link below. Application deadlines vary -- these are listed under each job description -- but the earliest is next Monday.

Actuary: We're looking for someone to review health and disability insurance rate filings submitted by insurance carriers to our office. This person will also provide assistance to our company supervision division's work, which includes analysis of the finances of insurers, holding companies and other entities.

Financial examiner: These positions work out of our office in downtown Seattle. Among other duties, our examiners audit the operation of insurers.

Analyst: We're looking for a life- and health insurance compliance analyst to work in our consumer protection division, which is located in our main building in Tumwater. The job involves helping consumers with insurance questions, problems and complaints.

Insurance technician: This position involves answering consumer hotline calls and routing them to staff in various divisions, including agent/broker licensing and consumer advocacy. It also entails some IT support work.

Office assistant: This person will provide receptionist services and first-line help to phone and walk-in customers, as well as a variety of complex clerical duties.

Trampolines and insurance

Q: I'm thinking about buying a trampoline for my kids. Are there any insurance issues?

A: Yup. Trampolines, while definitely fun, can cause injuries or even death. So it's a good idea to first talk to your insurance agent. Your insurance company may not want to continue coverage if you buy a trampoline. Also, if there is an injury claim, your insurer would review the claim, but might decide to later cancel your coverage. It's well worth a phone call to your agent or insurer first, rather than being surprised later.

Note: This is one of a series of common -- or in some cases, particularly unusual -- questions received by our consumer advocacy staff, who answer questions from consumers.

Got a question or insurance problem of your own? If you live in Washington, feel free to give us a call, toll-free at 1-800-562-6900. We'll do our best to help. (And if you live in another state or territory, here's a handy map that lists the contact info for your local insurance regulatory office.)

Trying to make our website better

We are redesigning the website for our agency (not this blog, but the whole Office of the Insurance Commissioner website). The point is to make it easy for consumers and other users of our site to quickly find exactly what they need.

Please help us by taking part in a brief interactive survey that will help us decide what topics to put where. It just takes a few minutes.

Many thanks.

OIC web applications: Back online

We updated the system underlying many of our web-based applications last night, and everything's back online. Thanks for your patience.

Our web applications will be down for several hours tonight

Shortly after midnight tonight, we'll be taking all of our web-based applications offline for system maintenance. They will be back up by 7 a.m.

During this time, most of our online services will be down. This includes things like online licensing, consumer complaints, E-tax filings, searches for health insurance rate filing, company lookups, agent/broker lookups, etc.

The website itself will still be up.

Sweeping through data in R

How do you apply one particular row of your data to all other rows?

Today I came across a data set which showed the revenue split by product and location. The data was formated to show only the split by product for each location and the overall split by location, similar to the example in the table below.

Revenue by product and continent
A 40% 30% 50% 40% 40%
B 20% 40% 20% 30% 40%
C 40% 30% 30% 30% 20%
Total 10% 40% 20% 10% 20%

I wanted to understand the revenue split by product and location. Hence, I have to multiply the total split by continent for each product in each column. Or in other words I would like to use the total line and sweep it through my data. Of course there is a function in base R for that. It is called sweep. To my surprise I can't remember that I ever used sweep before. The help page for sweep states that it used to be based on apply, so maybe that's how I would have approached those tasks in the past.

Anyhow, the sweep function requires an array or matrix as an input and not a data frame. Thus let's store the above table in a matrix.

Product <- c("A", "B", "C", "Total")
Continent <- c("Africa", "America", "Asia", "Australia", "Europe")
values <- c(0.4, 0.2, 0.4, 0.1, 0.3, 0.4, 0.3, 0.4, 0.5, 0.2,
0.3, 0.2, 0.4, 0.3, 0.3, 0.1, 0.4, 0.4, 0.2, 0.2)

M <- matrix(values, ncol=5, dimnames=list(Product, Continent))

Now I can sweep through my data. The arguments for sweep are the data set itself (in my case the first three rows of my matrix), the margin dimension (here 2, as I want to apply the calculations to the second dimension / columns), the summary statistics to be applied (in my case the totals in row 4) and the function to be applied (in my scenario a simple multiplication "*"):

swept.M <- sweep(M[1:3,], 2, M[4,], "*")

The output is what I desired and can be plotted nicely as a bar plot.

> swept.M
Product Africa America Asia Australia Europe
A 0.04 0.12 0.10 0.04 0.08
B 0.02 0.16 0.04 0.03 0.08
C 0.04 0.12 0.06 0.03 0.04

barplot(swept.M*100, legend=dimnames(swept.M)[["Product"]],
main="Revenue by product and continent",
ylab="Revenue split %")

One more example

Another classical example for using the sweep function is of course the case when you have revenue information and would like to calculate the income split by product for each location:

Revenue <- matrix(1:15, ncol=5)
sweep(Revenue, 2, colSums(Revenue), "/")

This is actually the same as prop.table(Revenue, 2), which is short for:

sweep(x, margin, margin.table(x, margin), "/") 

Reading the help file for margin.table shows that this function is the same as apply(x, margin, sum) and colSum is just a faster version of the same statement.

The Fixer

Her Nationwide guy suggested that she call me. And though I appreciate Mike’s confidence, I also know that his referrals are often people who have somehow fallen through the cracks of our system. This woman epitomized the permanent flaws in this and any system of health care. And more to my frustration than hers, I could not fix her problem.

Much like Eddie Vedder’s The Fixer, I have always been obsessed with making things right, of solving everyone’s problems. That empathy works well in what I do for a living. But I am deeply frustrated when I encounter a situation that can’t be fixed. Here is hers:

The woman, we’ll call her Maria, has group insurance through her employer. The cost of the policy has increased over the years, but the employer is still paying the vast majority of the premium. This year the employer changed the coverage to a High Deductible Healthcare Plan, in other words, a policy that qualifies for an HSA. Maria no longer has an office visit copay. Maria no longer has an Rx card. All of these expenses are applied towards her $4,000 deductible. In theory, this might save her money. In reality, she is screwed. She is on two very expensive medications. One is $885 for a three month supply. The other is $1,400!

Where does she come up with the money for these prescriptions? She makes just enough per month that she won’t qualify for any help from the drug companies. She makes too little to be able to afford the medications she needs to be able to work.

Got an answer? Neither do I?

No system could possibly sustain the cost of paying for everyone’s doctors’ visits, prescriptions, and hospital stays. We must contribute. We must either pay for insurance or be taxed by the government (or both) to fund the system that pays most of the bills. The balance, whether that structure includes copays or deductibles, must be paid by the person receiving treatment. Should we all be responsible for the same amount? Will there be a sliding scale based on income, location, or family size?

No matter the final outcome, most people will be offended when it is their turn to pay. Worse, many people will be forced to pay more than they feel that they can afford. And some will be buried in debt. The other choice is to simply limit the most expensive care based on survivability and efficacy. And that opens another set of worries.

In a recent Forbes article, Richard Grant argues that what we need is less regulation, not more. “Government’s main role has been to serve as the enforcer of a cartel that limits the supply of doctors, of hospitals, of drugs, and of innovative alternatives.” There is truth to all of that. And if we reversed our course and somehow made it to a completely open market, the well-off and educated, like Mr. Grant, might receive better care for less. Unfortunately, the Maria’s of our world would be collateral damage. I’m not sure which regulations Mr. Grant would like to eliminate. Do we want to trust the marketplace to license doctors and approve prescriptions?

The HSA policy is a half-hearted attempt at empowering the patient and controlling costs. It succeeds at neither. Does Maria need to be on these expensive medications? Would more common, less expensive drugs, be almost as good? Since at least one of these drugs is for a mental condition, would she have the needed faith in a new prescription that was purchased not because her doctor thought it was better for her, but because she can’t afford the good one? The experiment is doomed to failure.

And I can’t help her. And there is no moment worse for a Fixer than when he realizes that there is nothing that he can do.

Man charged with insurance fraud after $17,000 stolen-bicycle claim

A Pierce County man has been charged with insurance fraud, forgery and attempted theft after filing a $17,000 claim for two bicycles that investigators say he never owned.

John Leonard Southerly, of Fox Island, last May told his insurance company that two Specialized Epic bicycles and accessories had been stolen from his garage. He filed a police report with a Pierce County sheriff's deputy, saying that he'd left the garage door open and discovered that the two bikes, valued at $17,562, were gone.

Southerly told his insurer, Travelers Indemnity Co., that he'd bought both bikes from an Arizona company. When Travelers asked for copies of his receipts, Southerly sent an email that was purportedly from the bike company. The bike company email came from a Gmail account. Attached was an invoice for each bike. Southerly later also filed a sworn statement of proof of loss for the bikes.

Travelers sent an investigator to talk to the bike shop owner and try to verify that the invoices were authentic. Nope, the owner said, pointing out discrepancies.

Then, last June, Travelers received an email from a different Gmail address.

"This is Detective Harris," it began. "I work out of the Tacoma office. I am trying to follow up on a case that involves Mr. Southerly..."

The email didn't contain contact information for this "Detective Harris," or even specify which law enforcement agency the detective supposedly worked for.

Travelers denied Southerly's claim and turned the case over to the state insurance commissioner's Special Investigations Unit. It quickly determined that there is no Detective Harris working for the Pierce County Sheriff's Office, the Tacoma Police Department or the Lakewood Police Department.

With search warrants, the Special Investigations Unit determined that both Gmail accounts listed Southerly's real email as a secondary contact and were sent from Southerly's IP address.

On March 30, Southerly was charged in Pierce County Superior Court with one count of insurance fraud ("false claims or proof"), three counts of forgery and one count of attempted first-degree theft.

His arraignment is set for Friday.

Review: Kölner R Meeting 30 March 2012

The first Kölner R user meeting was great fun. About 20 useRs had turned up to exchange their ideas, questions and experience with R. Three talks about R & Excel, ggplot2 & XeLaTeX and Dynamical systems with R & simecol had kicked off the evening, with Kölsch (beer) losing our tongues further.

Thankfully a lot of people had brought along their laptops, as unfortunately we lacked a cable to connect any of the computers to the installed projector. Never-mind, we cuddled up around the notebooks and switched slides on the speakers sign.

Photos: Günter Faes

Similar to LondonR, it was a very informal event. Maybe slightly forced by myself, as I called everyone by his/her first name, which could be considered rude in Germany. But what I had noticed in London, and the same was true also in Cologne, was that people with a very diverse background and of all ages would meet to discuss matters around R, often not working in the same field. So why worry about hierarchies?

Most attendees were not R experts, but users in its pure sense, trying to solve real life problems, and I suppose that makes those meetings so special. R users are often not programmers by trade, but amateurs, who have a keen interest to extract stories and pictures from their data. And for that reason the discussions are often so engaging. Talking to people using R in social science, psychology, biology, pharma, energy, telcos, finance, insurance or actually statistics opens your mind and eyes. You realise that you are not alone, other people are weird as well. They have similar problems and challenges, but may use a different domain language and look at problems from a different angle. And this can be incredibly refreshing!

Anyhow, we agreed to meet again in about three months time. The pub was a great venue to socialise, yet a bit noisy for the talks. Hopefully we can use a room at the nearby university for the presentations next time. Promises were made already. We shall see. Günter was so kind to set up a mailing list to which you can sign up here. I will continue to use this blog to provide updates on the Cologne R user group in the future and set up a public calendar as well.


Many thanks to the speakers, who dared to give the first talks and had to improvise on the spot without a projector. Please drop me a line if you would like to speak at one of the next events.

Read more »

"Hobo Prince" ordered to stop selling illegal insurance in WA

From a press release we just issued:
OLYMPIA, Wash. – A Clark County man who promises years’ worth of weekly $900 payouts in exchange for a one-time $25 signup fee has been ordered to stop selling illegal insurance in Washington.

The order was issued Monday by the Washington state Office of the Insurance Commissioner, Mike Kreidler.

Shelby Horatio Bell, doing business as “Hobo Prince Economic Project,” has held seminars in Washington and Oregon, encouraging people to sign up for his plan. Once a participant pays a one-time $25 fee, Bell promises to pay the participant $900 a week for seven years.

He maintains that each person’s contract is financed through a complex series of transactions, including issuance of a $500,000 “reverse” insurance policy purchased with a $25,000 payment from an unnamed bank. A contract obtained by Kreidler's Legal Affairs Investigators named a well-known insurer and one of its brokers – neither of which have any insurance arrangement with Bell or his program. In another contract, Bell maintained that he was the insurer.

Neither Bell nor his companies (Hobo Prince Economic Project and an Oregon company known as Be’Rio Transports) are authorized to transact insurance in Washington state. The arrangement being offered violates multiple provisions of the state’s insurance code.

Kreidler’s office repeatedly tried to contact Bell by phone and mail. Reached by cell phone at one point, Bell agreed to meet with a state investigator, but then didn’t show up for the appointment.

The cease and desist order requires Bell and his companies to immediately stop selling, offering, or soliciting any insurance in Washington. It also bars him from transacting insurance business in the state.

Nothing in the order prevents Bell or his companies from fulfilling the contracts that he has already entered into. Nor does it prevent him from refunding money paid by Washington consumers.

Bell has the right to demand a hearing to contest the order.

The full order can be found at: http://www.insurance.wa.gov/oicfiles/orders/2012orders/12-0076.pdf

King County woman pleads guilty to forgery and attempted fraud

A King County woman has pleaded guilty to attempted fraud and forgery for trying to claim weeks of injury-related lost wages after an auto accident. The problem: She didn't have a job at the time.

Ka'Yah M. Alexander claimed that a 2010 accident in the parking lot of a Memphis, Tenn. hotel left her unable to return to work for 37 days due to her injuries. She sent a demand letter to Travelers Insurance, seeking $10,000 for lost wages, pain and medical expenses. She also sent the company a letter, purportedly from the group home where she worked, saying that she was on medical leave from work.

An investigation by Travelers and by the state insurance commissioner's Special Investigations Unit determined that the work-loss letter was not authentic.The company provided a termination letter showing that Alexander had been let go from her job two days after the accident.

Alexander pleaded guilty last month. She was sentenced to fines and community service.