Monday, October 17, 2016


October 16, 2016

I got to the office in the middle of the second quarter of the Browns’ game. I left a 7:30. It was time. I had spotted a unicorn.

Open enrollment for Medicare Part D (Rx) and Medicare Advantage products technically began yesterday. It will officially start at 9 AM tomorrow morning in my office. Most of my Medicare visitors will be coming to confirm that they don’t need to do anything. No changes, just a cup of coffee and some conversation.

My real challenge is the open enrollment for individuals under age 65. Most of my clients received their renewal packet on Saturday, October 1st. They began calling my office that day. Unfortunately, we, the agents that service these insureds, never got our copy. We were told that the packets were in the mail. We were also told that we could download, one 8 page renewal at a time, from the insurer’s website. Hundreds and hundreds of renewals. I gave up and started to pull and print these a few days ago.

And today I am in my office to work on these renewals.

I am not complaining. I am not telling you about this process because I am some kind of insurance martyr. I love this gig and I’m not the only guy working on a Sunday. Successful agents throughout this country are evaluating their clients’ 2017 health insurance options.

One by one I review each renewal. Should the client stay with his/her current insurer or move? Would a higher deductible save enough money to be worth the additional exposure? Is this the year we should try for a tax credit subsidy? And then, once I know what I would like for them to do, I send them an email or a hand-written note.

This process isn’t fast and it can’t be delegated. The insureds are counting on the agent’s experience and expertise. The health insurance premium may be someone’s second or third largest monthly bill. My goal is to have all of these processed before November 1st. My fellow agents are working just as hard.

I had predicted a tough year. I expected increases of 15% - 20%. Policies that have Rx and office visit copays are coming in around 17%. My HSA policies seem to be averaging a few percent less. The highest HSA deductible plans, now $6,400, were renewed at the best rates. Those policies may work for some people, but not for everyone. Analyzing the options, not simply choosing the cheapest, gives us a better claims experience should you ever get sick or injured.

One of the clients that contacted me on the 1st was particularly concerned about his increase. He and his family got hammered. 25%! It took some time this afternoon to figure out why. What happened? I determined that his son was the main reason for the price jump. He turned 21 this year and will now be rated as an adult, not a child. Just to be sure, I went to the insurer’s website and ran a quote as if he was only 20. I don’t know if this family will be any happier about their new rate, but at least they will understand why.

A unicorn is a mythical creature. They supposedly exist, but no one has ever seen one. My insurers said that the renewal rates were the best that they could offer. Heck, some people might even see a rate reduction as the deductible on the HSA qualified policy drifts from $6,000 to $6,400. It was about 7 PM when I found a renewal with a 7% decrease. A decrease! I rerated the family just to be sure. I sent the client an email, packed up my stuff, and locked up.

Once you spot a unicorn, it must be time to go home.


Thursday, September 29, 2016

One Choice Is No Choice


I was licensed with over fifty different insurers. Sure, most of my Cuyahoga County clients acquired their health insurance from one of the half-dozen major carriers, but Gosh there were a lot of choices. That was 10 years ago. Now we have two or three good options in Greater Cleveland. And we’re the lucky ones.

Ohio’s population is spread across eighty-eight counties. We have major metropolitan regions, cities, towns, and rural areas. We all may share the same state government, but we do not share the same health insurance options. Cleveland, Columbus, and Cincinnati have choices. Nineteen Ohio counties will have only one health insurer participating on the Exchange in 2017. One! Twenty-eight Ohio counties will have twice as many insurers, Two.

In nineteen counties, if you don’t like Anthem Blue Cross, you can still choose Anthem Blue Cross. That’s it. And by the way, thank G-d it is Anthem and not some tier 3 level Brand X insurer. But one choice is no choice. Will Anthem’s network cover Your doctor? Your hospital? Be affordable? I can’t answer that until the final rates and plan information are released.

And yet we are still considered fortunate in Ohio. Less than 15,000 current Exchange enrollees reside in a single-insurer county according to the Iowa City Press-Citizen. The national picture is much worse. Five states – Alabama, Alaska, Oklahoma, South Carolina, and Wyoming – are limited to a single insurer for the individual health insurance Exchange. That is five entire states. Several others are limited to a single insurer for most, but not all, of the state. According to a recent New York Times article, 17% of the U.S. population will have only one individual health insurer available in 2017.

Where are the other insurers? We’ve seen companies fail (the government created Co-ops, HealthSpan) and we’ve seen companies abandon the market. Aetna and UnitedHealth Care have been the most vocal about leaving the individual market. UHC and Aetna both reported incredible profits this year. It is important to note that these profits are in spite of, not because of, their individual Exchange business. UnitedHealth Care reported a loss of close to $500 million in 2015 on new individual health policies compliant with the Patient Protection and Affordable Care Act (Obamacare). An Aetna press release of August 15, 2016 details a Second Quarter pretax loss of $200 million.

Neither Aetna nor UnitedHealth Care see any reason to continue to bleed money by selling individual policies on the Exchange. They have a duty to their shareholders to market products that make money. Individual policies do not appear to be profitable under the PPACA.

Where does that leave us? In truth, we are right where I predicted we’d be when I wrote Over The Tree, Close To The Front Of The Green in April 2010. Our “Grandfathered” and “Grandmothered” policies are getting too expensive to keep. The new policies, even with a tax credit subsidy, are too expensive for many Americans. And we have few choices. What is the solution? The answer, for many, is the Public Option.

According to USA Today and the Huffington Post, to cite a couple of sources, the Senate Democrats are pushing for an alternative to the private insurance market, a Public Option. And this isn’t just Bernie Sanders (I-Vt.). Senator Chuck Schumer (D-NY) and Senator Patty Murray (D-WA) are involved in this effort to offer a government plan to all Americans. There is also a parallel concept of expanding Medicare from age 65 to age 55.

As we learned from the disastrous Co-op experiment, the government, and the people the government empowers to run business-like entities, will over-promise and underprice the product. The insurers will not reduce their premiums and increase their losses to compete. They will abandon the market completely and let the public option drown. And then? And then the government will be forced to ride in and save us with a true, Medicare-like product for all of us.

And we will be left with one choice. And one choice is no choice at all.


Cunix Insurance

Tuesday, September 6, 2016

We Don't Need No Regulations


They were at it again. The politicians were railing against unnecessary regulations. Their #1 villains are those damn government bureaucrats who make our products uncompetitive and cost us jobs. They can pontificate for hours but become strangely quiet when pressed to address the benefits of regulation.

We aren’t going to waste time discussing the recent Olympics in Rio, the air quality in Beijing, or the new interest in earthquakes in Oklahoma. This being Health Insurance issues With Dave, we are going to look at prescriptions.

Insurance applications used to ask health questions. EpiPens, like inhalers, appeared on a few applications each year. That changed about ten years ago as more and more clients kept an EpiPen or inhaler just in case. The inhalers were for a sudden asthma attack. The EpiPen was designed to inject the generic hormone epinephrine to prevent anaphylactic shock from an allergic reaction.

What was once rare was now common. By 2013 the federal government was strongly encouraging schools to have an emergency supply of epinephrine (EpiPens).

We have a product that has been around for decades, cost next to nothing to make, and does great business. These things should sell for about the price of a bottle of ketchup. OK, it is a prescription so maybe the price of a case of ketchup.

The EpiPen is sold in two pen sets. Ten years ago a set was a little over $100. Today, over $600. Is the drug more effective? No. Are the ingredients more expensive? No. What changed?

The biggest single change was Medicare Part D (Rx). The 2003 law “exempts Part D drugs from ‘best price’ rebates that drugmakers have been required to give to the state Medicaid programs since 1991” (The Hill). While some may argue that this provision has caused a large increase in the development of senior-related medications, many of us have also noticed that there is a huge market for senior-related products since 10,000 baby boomers turn 65 daily. I believe that the R & D would have come with or without the government handing the pharmaceutical companies the keys to the vault.

The last thirteen years have given us drug company mergers, hostile takeovers, and even a hedge fund guy who increased a little known HIV drug by 5000%. And that takes us back to Mylan Pharmaceuticals and their EpiPen.

Did Mylan develop the EpiPen? Hell No. Mylan purchased a generic drug manufacturer in 2007. The EpiPen was just one of the products they acquired. R & D cost – Zero. Current price? Whatever the market will bear. There is very little that can be done about this. Oh sure, there will be a lot of harrumphing in the Senate. But in the end, there will be some coupons, a slightly lower price, and a promise from Mylan’s CEO to be a better corporate citizen.

What we need is both more and more effective regulation. There are thousands of generic drugs waiting for final approval. This is not effective regulation. And, at the very least, we need to create a pricing formula for decades’ old generic medications.

The EpiPen problem reminds us that we have no way to prevent price gouging and other unscrupulous business practices without regulations. Regulations can be the locked doors that keep honest people honest.


Monday, August 15, 2016


It happened again on Friday. Another COBRA victim. I have talked with three people in the last few months who lost money due to COBRA. There is talk of ending or, at the very least, amending the Consolidated Omnibus Budget Reconciliation Act (COBRA). That should be a goal for the spring of 2017.

What is COBRA? This is from the Department of Labor:

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

In English – You get to keep your health insurance policy if your ex-employer 1) had a policy, 2) had more than 20 employees, and 3) if you pay the full monthly premium plus up to 2% for processing. You may keep the policy for up to 18 months, 36 months if you are losing coverage due to death or divorce.

COBRA was very important. Prior to the Patient Protection and Affordable Care Act (PPACA or Obamacare), unhealthy individuals and families could be declined for coverage due to preexisting conditions. COBRA guaranteed 18 months to find an acceptable option.

COBRA also allowed someone who had already met an annual deductible to retain coverage for the balance of that calendar year. This may still prove useful even under the new law.

COBRA, retaining the ex-employer’s policy, may also be less expensive than purchasing a new policy. This is more likely if the individual is in his/her late fifties or early sixties.

So far, so good. What could be bad?

Christopher (name changed) worked for over twenty years at a local service organization. His position was consolidated with two others and he was let go. This was in October. The first six months of COBRA were paid by his ex-employer as part of a generous severance package. Chris was shocked by the $1,100 bill he received in late April for his May premium. He had no idea. He was referred to me and we met a few days later. I was forced to deliver terrible news. Chris missed the Annual Open Enrollment. Discovering that you have expensive COBRA does not qualify for a Special Enrollment Period. Christopher must keep this policy for the balance of 2016 if he wants to retain PPACA compliant coverage. What looked like a lifesaver had become cement shoes. His ex-employer didn’t understand how COBRA works in this new environment.

Another issue is that COBRA and Medicare are like oil and water. If you are over 65 and work for a business that has over twenty employees, your group health insurance is primary. Medicare is secondary. Most of these people save their money and don’t enroll in Medicare Part B. But, COBRA doesn’t count. Failing to enroll in Medicare Part B when you become eligible may result in a penalty and being forced to wait until the annual enrollment period the following January. This is an expensive common mistake.

Angela (name changed) made the above mistake. She was supposed to enroll in Medicare Part B six years ago, a few months into COBRA. She didn’t. Angela got a new job with benefits about a year later. Now, at age 71 and ready to retire, she will be forced to wait until next July for Medicare to begin. Angela will pay more than twice as much for inferior coverage due to her error six years ago.

My last example is Charlotte (ditto) who visited my office on Friday. Her last day at a major Cleveland employer was June 30th. She spent twenty-nine years at a really big company. Charlotte signed up for Medicare Part B. Since she didn’t have the time to do any research and had zero help from H.R., she enrolled in her employer’s retiree COBRA plan, a mediocre $400 Medicare Supplement-like policy. A month later she realized that her friends all have better coverage for a lot less.

Charlotte paid a price for convenience. Even though she is 66, this was her Medicare Initial Enrollment Period. You have just one bite of the apple and she picked a bad one. She still has options, but she has forfeited some of the flexibility and guarantees that had been available in June.

There is still a place for COBRA under Obamacare, but it is not as important as it once was. So maybe it is too early to unleash the mongoose, but I’m keeping mine fed and ready.


Sunday, July 24, 2016

A Cheap Date


There was a time, back when I was in high school, when a boy asked a girl out for a date and paid for the evening.  Movies, a dance, even dinner – he asked and he paid.  A cheap date was a girl who didn’t insist on the fanciest restaurant for every date and didn’t search the menu for the most expensive meal.   When we got into our twenties, a cheap date was someone who might only order one or two glasses of wine and didn’t view dating as a competitive drinking sport.
The young woman in my office last week has never been a cheap date, at least not from an insurance perspective.  Millie (name changed) is an insulin-dependent diabetic, has been most of her twenty-four years.  She has lots of claims every year.  There was a time, about ten years ago, when her mother and I had real concerns about finding health insurance for her.  Now it is no big deal.
I used to be a cheap (insurance) date.  The only time I saw the doctor most years was for my annual physical.  No Rx.  No issues.  This year has permanently changed my status.  University Hospital and the doctors have submitted bills for over $550,000 for my care.  Millie and I now have something in common.  No Insurance company would take us if they had a choice.
We are not alone.  Many of you have pre-existing conditions from an illness or injury.  You used to be cheap dates.  You paid your premiums and seldom filed a claim.  An accident or ailment changed that.  The most important benefits of The Patient Protection and Affordable Care Act (Obamacare) are the absence of medical underwriting and that all policies cover pre-existing conditions.  Millie and I can apply for coverage with no fear of being turned away.
Are those benefits safe?
I get the calls at least once week:
  • Are they going to repeal Obamacare?
  • What happens if the Republicans win?
  • Is my policy going to be cancelled?
My standard answers are:
  • No.
  • Nothing.
  • Probably not, but if it is we’ll find a new one.
We just watched the four day infomercial for the Republican Party and are moments away from the Democratic Party’s version.  Did you hear a substantive discussion about healthcare, 20% of our economy?  Of course not.  Six years of Obamacare have yielded millions of dollars of negative political ads but not even one serious alternative proposal.  Even if we wanted to, we can’t magically return to February 2010.  We can’t just repeal the PPACA and then begin the difficult process of creating a new program.  If there is to be an alternative, it must be designed with a seamless transition.
That is, of course, just my opinion.  This blog has reviewed all of the Republican plans including Speaker Ryan’s latest last month.  I have been trying to include coverage of the Libertarian Party’s proposal.  In May I interviewed one of the candidates who had been running to be the standard bearer for the Libertarians.  His suggestion was to eliminate the PPACA and to make charitable donations a dollar for dollar tax reduction.  People would then donate to hospitals and everyone would receive the care they needed without any government involvement.  I laughed until I realized that he was serious.  Their official platform has no information or details.
But with no disrespect to either the Libertarian or the Green Parties, our next president will most likely be either a D or an R.  But that doesn’t mean that there aren’t major issues with the PPACA.  The insurers have not found a way to make money under this new system.  They will continue to tinker with their networks and plan designs.  Hospital and doctors are looking at different business models to reduce expenses and maximize payments from the government and insurers.  A new president may be more successful working with a new Congress to make the needed changes to Obamacare.  Perhaps, under new leadership, we can get a bipartisan buy-in once we change the name.
It is important to remember that we are talking about 20% of our economy.  Our population is aging.  Our cost of care is rising.  Americans demand the very best of care.  And we are never a cheap date.

Wednesday, June 29, 2016

The Publicity Stunt

The Speaker of the House, Paul Ryan (R-WI), was clearly agitated. The Democrats were holding a sit-in on the House floor in order to push for a vote on gun control legislation. He later labeled the protest, led by civil rights icon John Lewis (D-GA), a publicity stunt. And he was right. The Democrats became the major story of the day thus overshadowing a different publicity stunt, Speaker Ryan’s attempt to grab attention earlier in the day.

This being Health Insurance Issues With Dave, we will give Speaker Ryan the attention he craves. Announcing the G.O.P.’s A Better Way. Our Vision For a Confident America.

Yes, it’s here. Thirty-seven pages of pure Conservative legislative joy. Here is the link. Better yet, here is the link to the one page summary. You probably won’t want to waste your time on the long version once you’ve taken a peek at the summary.

The summary is one page, bullet point laden, and facts optional. It promises a Republican Plan that retains all of the things you like from the Patient Protection and Affordable Care Act (Obamacare), such as guaranteed access and dependent care to age 26, without any of the costs. Really, no tax increases. Zero! The Republicans feel that codifying the Hyde Amendment is also a major selling point. And speaking of selling points, the summary never mentions President Obama or Obamacare. Instead, Obamacare is renamed “Speaker Pelosi’s Bill”. The full version isn’t much better.

Speaker Ryan is very proud to announce that this 37 page outline of ideal, goals, and wishful thinking is the first plan universally endorsed by all of the Republican leaders in the House. It isn’t really supposed to be a plan. When asked, leadership has labeled it a “White Paper”. I actually printed out and read the full presentation. It is the only way to know that Speaker Ryan forgot to estimate the cost of his programs or that he is pushing Medicare to age 67 (page 36).

A Better Way is really an organized collection of the Republican’s greatest hits of the last six years. We rejected most of these ideas as inconsequential then. They aren’t more relevant repackaged today. Part of the problem is the refusal to face the realities of the insurance marketplace and the inclusion of information that is laughably false.

Here are the five principles of A Better Way:
  1. Repeal Obamacare
  2. Provide All Americans with more choices, lower costs, and greater flexibility
  3. Protect our nation’s most vulnerable
  4. Spur innovation in health care
  5. Protect and preserve Medicare
Protect our nation’s most vulnerable. Patients with pre-existing conditions, loved ones struggling with complex medical needs, and other vulnerable Americans should have access to high-quality and affordable coverage options. Obamacare’s solution was to force millions of people onto Medicaid…
No, it didn’t.

The PPACA eliminated medical underwriting. We no longer ask health questions when you apply for coverage. Pre-existing conditions are covered completely. And the premium for your insurance policy no longer reflects your previous claims or medical conditions. Medicaid, where expanded, allowed additional lower income individuals and families to acquire coverage regardless of their health. Statements like the one above call into question the seriousness of the document.

And how does A Better Way deal with our most vulnerable? Badly. This plan reintroduces medical underwriting and suggests that we reinstate state run High Risk Pools. The Republicans strongly criticized the transitional High Risk Pools of Obamacare. They were, in part, correct. Five Billion Dollars wasn’t enough even though this was just for the transition to the full implementation of the new law. This program offers Twenty-five Billion Dollars (from where?) and walks away from the unhealthy.

Here are a few of the other highlights of Speaker Ryan’s plan:
  • No requirement to have any health insurance policy
  • No Coverage Standards (under or over age 65!)
  • An age based refundable tax credit to replace the income based subsidies
  • Adjust premium ratio to 5 – 1
  • A significant overhaul of Medicare
  • Changing the onset of Medicare to that of the Social Security Retirement Age.
It is important to note that Obamacare is far from perfect and that some of the ideas included in A Better Way might help the law to work better. That is, of course, ruled out immediately by Speaker Ryan and his team. It is this unwillingness to work with the President that makes all of these documents wasteful publicity stunts.



Monday, June 13, 2016

June 2016 Update

There is a lot going on. Today’s blog post will also be sent separately to my clients. The next blog will deal with high concepts, today we tackle some of the basic issues that affect most of you. But as I said, this blog will be duplicated as my current client letter. Read this and you get to skip the letter.

This isn’t as easy as it looks. Running a health insurance company is a lot than it appears. Any number of hospitals, medical organizations, not-for-profits, and government entities have invaded my business over the years. On paper it doesn’t look like that big a deal. Collect a lot of money (premiums) and pay the doctors and hospitals for services rendered (claims). We’ve recently lost InHealth, one of the government created CO-OP’s, and Catholic Health Partners’ foray into insurance, HealthSpan. Both entities were spectacular flops that failed to survive five full years.

Unfortunately, even the pros are having their struggles. I have seen a massive increase in insurance company errors. This may be, in part, due to the Patient Protection and Affordable Care Act (PPACA or Obamacare). As the companies expend millions of dollars to comply with new regulations, they are also limited in how much of each premium dollar can be spent on infrastructure (Medical Loss Ratio). Something has to give. The problems created y insufficient staffing and quick fixes directly affect you.

Quick example – A client recently purchased a policy with a $5,000 deductible. The application was accidentally changed to a $1,000 deductible at the Home Office. Understaffed, this major insurer had no one to catch the error. The system simply spat out the more expensive policy and a bill. The client called as soon as he got the bill. It only took me an hour or so to figure out the problem and to get the insurer to promise to fix it. What a waste of time and money. And yes, cancelling and reissuing the policy costs them a lot of money. These costs will eventually be passed to us.

Billing is a huge issue. Let’s say that you arrange to have your monthly premium electronically withdrawn from your checking account or credit card. Your policy will lapse if the money doesn’t transfer. It doesn’t matter if the insurer screws up and fails to take the money (more common than you’d think). No one cares if Chase gets hacked again. You will get no pity if your check bounces. It is up to you to make certain that the money left your account or was charged to your card. And if it isn’t, you must call your agent or the insurance company immediately. We don’t have the flexibility we once had. I currently have four clients in limbo due to this.

Grace Periods are for emergencies. Too many people think that a 30 day grace period means that their policies are due on the 30th of the month, not the 1st. You know what happens. They are a touch late, miss the end of the grace period, and are then shocked that they are suddenly uninsured. This can be a really expensive lesson. Many of us cannot afford to be without coverage. The first check I authorize each month is my health insurance bill, FOR THE FOLLOWING MONTH.

Short Term Policies are under attack. Many of my clients have been purchasing short term major medical policies. These policies are not compliant. Preexisting conditions are not covered and the policies are not guaranteed issue. The premiums for these policies and the tax penalty for opting out of Obamacare may still be a lot less than a compliant policy. The State of Ohio recently expanded the definition of short term to 360 days, further enhancing this consumer safety valve. The people who purchase these policies tend to be very healthy. And that is the problem.

It took a while but Health and Human Services Secretary Sylvia Burwell has realized that one of the reasons health insurance premiums are skyrocketing is that lots of healthy people are opting out. Sales of short term policies are higher now than in 2013. Secretary Burwell wants to restrict the policies to 90 days in an effort to force healthy Americans back into the general risk pool.

The perspective short term regulations were just announced a few days ago. The next step is a 60 day period for public comment. The final regulations, if any, will be crafted mid-August. I will be monitoring this issue.

As a point of personal privilege, I’d like to thank so many of you for your cards, calls, and emails. The post Shedding Pounds By Shedding Organs is the quick explanation of how I got here. I started radiation on June 6th. 9 weeks. 5x per week. I’m fine. I feel stronger every day.

Open enrollment is still several months away. We will get through this together.