Tuesday, September 6, 2016

We Don't Need No Regulations



Door

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.

DAVE

www.cunixinsurance.com

Monday, August 15, 2016

Mongoose




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.

DAVE

www.cunixinsurance.com

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.

DAVE

www.cunixinsurance.com

 

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.

DAVE

www.cunixinsurance

Wednesday, May 25, 2016

DAD



Dad

I got caught. One of my readers noticed that I had yet to say a word about Senator Bernie Sanders and his health plan. I have reviewed plans from Scott Walker to Donald Trump. I’ve even covered Obamacare-lite plans from the Senate Republicans. But like Secretary Clinton, I just kept waiting for him to go away. But he hasn’t…

I read Senator Sanders’ plan over the weekend. It is very easy to understand, especially if you are five years old. Go to the doctor and Dad pays the bill. You may, or may not, get a lollipop, but no one will ask you, at age five, for any money. Need a prescription? Go to the drugstore. Dad’s got it covered. Hospital? Physical therapy? Inpatient substance abuse? Whatever you need, don’t worry. Dad’s got you covered. Great Dad. Rich Dad. Really rich.

Dad is the federal government.

Senator Sanders plan provides 100% coverage. No deductibles. No coinsurance. No copays. He pulls all of the consumer money out of the system. He eliminates all patient incentives to limit or question care.

Where does the federal government get all of this money?
  • 6.2% income-based health care premium paid by employers
  • 2.2% income-based premium (after deductions) paid by households
  • Tax capital gains and dividends as ordinary income
  • Limit tax deductions for households earning over $250,000
  • Rejuvenate the estate tax
  • Increase marginal income tax rates to 37% for a $250,000 family income to 52% on incomes over $10,000,000
That is a lot of tax. It would take a very different Congress to pass a funding bill that looked anything like the wish list, above.

It is difficult to illustrate an apples to apples comparison. Your average 40 year old has an insurance premium, deductible, coinsurance, and copays. This plan has none of that. The closest I can provide would be Medicare.

My clients love Medicare. They’ll tell you how they don’t pay anything at the doctor’s office and how they never saw a bill after a hospital stay. Even prescriptions are manageable.

Of course, that’s not Medicare. That is traditional Medicare plus a Medicare Supplement Plan F plus a Medicare Part D (Rx) plan. But most people just see it all as Medicare once it is all put in place.

Medicare is not free. We have all been paying into it for years. The doctors and hospitals are paid on a fee schedule that is more subject to politics than market forces. This is what you would pay if you turned 65 next month and went on to Medicare.
  • Medicare Part A - No Charge
  • Medicare Part B - $121.80 per month
  • Medicare Supplement Plan F - @$150 per month
  • Medicare Part D (Rx) - @$20 per month
The total for someone just turning 65 would be about $292 per month or $3514 per year.

The Sanders plan does not factor in age, just income. A 22 year old pays the same as a 72 year old, probably more.

How much would an unemployed/retired 65 year old pay under Senator Sanders’ plan? Assuming a Standard Deduction:
  1. Annual Income of $20,000 - $281.60 per year
  2. Annual Income of $40,000 - $721.60 per year
100% coverage for $281.60, an annual savings of over $3,200! It takes a lot of income tax on rich people to make these numbers work.

Does this prove that the Sanders plan can’t succeed? No, but I believe that it would take a giant leap of faith to make these numbers fly. The lack of consumer/patient involvement dooms the program. I still believe that the Patient Protection and Affordable Care Act (Obamacare) has put us on the path to a single-payer system. I just don’t see how it could be a 100% plan.

Free. We want free. But we’re not five and Dad, even a Dad that can print money, can’t afford to give us everything we want.

DAVE

 

Picture is of a dad, but not one who can print money.

 

Tuesday, May 10, 2016

Cheap At Twice The Price




The University Hospital system is incredibly efficient. I’ve spent a lot of time lately in both the suburban facilities and the main campus. The clerks manning the check-in desks and the schedulers don’t do anything until they make a copy of your photo ID and insurance card. I once went to the same office, same clerk, two days in a row. She didn’t deviate, didn’t skip a step. University Hospital knows how it is going to be paid. And that’s a good thing. I just thought it weird when the gift shop asked for my photo ID and insurance card...

# # # #

The young widow had her own share of nagging health issues. Last May her doctor looked her in the eye and told her that he wanted her to have a heart catheterization. This wasn’t an emergency. He just felt that it was warranted. More importantly, he wanted a specific doctor at U.H. main campus to perform the procedure. This would be fine except that Brenda (name changed) has Medical Mutual of Ohio. MMO’s network includes the Cleveland Clinic and the suburban University Hospital facilities. It is common knowledge that Brenda had great coverage throughout Northeast Ohio. Everywhere but U.H. main campus.

He sent her to U.H. Main Campus.

Brenda should have known better, but she was totally focused on the fact that she needed a heart catheterization. The doctor simply didn’t care. The schedulers, both at the doctor’s office and at U.H. main campus, noted her coverage as they set up her non-emergency appointment. And since it was not an emergency, she had close to a month to worry about this procedure and her health.

Brenda got the call the day before the procedure. It was a courtesy call from University Hospital to let her know that she was going to be out-of-network. Did she still want her heart catheterization? It was too late to turn back. She had worried about this for almost a month. She made a snap decision. How bad could it be?

$11,000

Brenda paid $11,000 in out-of-network fees. I consider this an abuse of privilege. Everyone involved knew that Brenda was going to the wrong facility. This was not an emergency. And this was too high a price to pay for good news.
# # # #

The bills are coming in for my little adventure. University Hospital, the doctors, and the labs have submitted claims in excess of $250,000. So far. My share, to date, has been my $5,500 deductible. All of my services were rendered by in-network providers. Anthem seems to be doing their job so that I can do mine, recover.

$250,000! I think that it would have been cheap at twice the price.

DAVE