Cavalcade of Risk #212: Call for submissions

RJ Weiss hosts next week's Cav. Entries are due by Monday (the 7th).

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

You'll need to provide:

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

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

Unsustainable - The Party is Over

The outlook for Obamacare is extremely cloudy in the Sunshine State (and the other 57 as

well). As bad as it is now, storm clouds are brewing for 2017.

In two years, the ACA’s structural problems will lead to substantial premium increases. Once that happens, Floridians will likely leave the insurance market in droves. They’ll have little choice—they won’t be able to afford health insurance because federal subsidies won’t keep up with the rapid price increases. Within a decade, this could swell the ranks of the state’s uninsured by 45 percent.

Tampa Tribune

Well that's disturbing.

But why won’t this happen until 2017? Because that’s the year when the Affordable Care Act goes into full effect and certain temporary provisions begin to sunset. The changes will affect all plans sold for 2017 and beyond.

Two big changes will occur that year: Insurance companies will no longer have access to ACA’s “re-insurance” and “risk corridor” programs. The first item currently allows insurers to bill the government for the most expensive patients; the second one guarantees that the industry’s losses will be subsidized by you. When these two programs end, the insurance industry won’t have access to taxpayer money.

That leaves Floridians to pick up the tab. 

2017.

Very significant.

2016 is Obama's last year as president.

Crowd goes wild.

Whoever inherits what is left of the Oval Office will see something like the mess following a frat party. 

And to think Obama and Uncle Joe said they had it bad with what they inherited.

Deadly Consequences [UPDATED]

Stories keep rolling in about the incompetence of Obamacare exchanges. 

Most point out the number of people who were "approved" for coverage but now the government wants to make sure they are really eligible ............. almost 7 months after the fact.

Linda Rolain's story is different.

Linda Rolain applied for Obamacare through the Nevada Health Link exchange but due to "mix ups" she never got the coverage she applied for and paid for.

Rolain was one of about 150 Nevadans suing Nevada Health Link contractor Xerox for enrollment mix-ups that left them without the health insurance they paid for.

Rolain is the first to die of complications from an illness said to have gone untreated for lack of coverage. But observers close to her case say she may not be the last.

Review Journal

For all the complaints about insurance carriers, I don't believe they were as incompetent as the federal government has proven to be.

Rolain’s husband, Robert, said the couple began trying to sign up in November, well ahead of the Dec. 15 deadline for January coverage. After wrestling with repeated sign-up problems, the Rolains bought a plan that took effect in March. But they said Xerox staffers miscommunicated the policy’s effective date, so they didn’t know until May that they had coverage.

Unconscionable.

“This poor lady was told in January that she needed immediate attention,” Casale said. “Her doctor said if she had begun treatment in March, he might been able to give her quality of care, and she might have lived longer. She had no chance because of the delay.

“Ms. Rolain should have had coverage in January. (The Rolains) did everything they could to facilitate the acquisition of a health plan,” Casale added. “She suffered and she died all because of the negligence of a vendor who should not even be in the industry.”

No argument here.

Not only does the vendor have no business being in the insurance business, but the same can be said for the government.

UPDATE [HGS]:



"Stories made up from whole cloth, lies"

Tell that to your (former) constituent Linda Rolain, Harry.

Kidnapping & Ransom & Insurance

It's been a while since we've even touched on the subject of Kidnap and Ransom insurance, and that was primarily as it relates to piracy. But as our world has gotten more dangerous (and smaller), it may be worth a quick lesson in how this kind of coverage works. And thanks to the folks at Global Underwriters (nationally recognized experts in this special risks area), we can offer a primer.

First, this type of insurance is actually comprised of several distinct but interrelated risks:

The most obvious, of course, would be Kidnap and Ransom. The covered event "is the abduction and holding of a covered person by someone who is demanding a ransom in exchange for the release of the captive person."

The coverage ostensibly covers the ransom payment itself.

"Ostensibly," Henry?

Peter Schulteis, Executive Vice President  of Global Underwriters, pointed out that it's illegal to insure an actual crime, so carriers have figured out an administrative solution to legally reimburse the actual payment.

There's a related covered peril called Express Kidnapping, which "covered event is a kidnapping where the duration of confinement is less than 24 hours." This was less obvious to me, and I asked Peter for an example: imagine that you've flown over to Merry Olde England for a long weekend of Wimbledon watching, and some bloke sticks a shiv in your ribs, demanding that you hie to the nearest ATM and hand over some cash. That's the kind of thing that this piece covers.

Next is Hijacking, which is defined, conveniently enough, as "the illegal holding under duress of an insured while on board any form of transportation by people who demand a ransom in exchange for release." This is basically an enhancement to the underlying kidnapping coverage.

Detention is "an arbitrary and capricious act of involuntary confinement of a covered person." An example might be the young mother currently hiding out in the American embassy in the Sudan: while traveling, your papers are found "not to be in order," so we'll hold you until you pay up.

And finally, we have Extortion ("when there is receipt of a threat to cause bodily harm or property damage by persons who demand a ransom to not carry out the threat"). Peter offered the fascinating story of how, a few years ago, Chiquita (of yellow fruit fame) was approached by hoodlums who threatened to kill the company's Ecuadoran employees, bit would refrain from doing so for a monthly "fee."

A truly amazing - and scary, really - look into an area of insurance which doesn't get a lot of attention (and maybe that's a good thing).

Thanks, Peter!

And the hits just keep on comin'

This morning, Bob posted on the outrageous waste of money called the Health Exchange, and to which I added a note about its apparently non-trivial cyber-security problems.

But it apparently doesn't take Romanian hackers to fundamentally destroy the site's credibility or usefulness:

"According to [a report from the health department inspector general], the administration was unable to resolve 2.6 million so-called "inconsistencies" out of a total of 2.9 million such problems from October through December 2013."

That's a 90% fail rate. And that's even after "applicants submitted appropriate documentation."

Winning!

Oh, and there's this: out of those 330,000 or so cases that were actually "fixable," only about 3% were actually resolved. And that's a 97% fail rate.

My apologies to those of us who were told that there'd be no math.

$1 Billion Doesn't Go Very Far Anymore [UPDATED!]

There was a time when $1 billion meant something. For that kind of money you could get several really, really nice homes. Or a stable (or more) of luxury cars.

For a billion dollars you could own a fleet of McDonald's or Subway shops.

But if you want a working consumer website, $1 billion isn't enough

At launch time, TurningPoint found that less than a quarter of HealthCare.gov’s code had been tested.

The total tab for the dysfunctional website? A healthy $834 million, as of the end of February. This fiscal year, HHS projects to spend $1.4 billion on HealthCare.gov.

Forbes

I'll admit, $1 billion sounds like a lot of money to me. It made me wonder how much the private sector spent on developing their websites.

Here ya go.

Facebook, which received its first investment in June 2004, operated for a full six years before surpassing the $500 million mark in June 2010. Twitter, created in 2006, managed to get by with only $360.17 million in total funding until a $400 million boost in 2011. Instagram ginned up just $57.5 million in funding before Facebook bought it for (a staggering) $1 billion last year. And LinkedIn and Spotify, meanwhile, have only raised, respectively, $200 million and $288 million.

Digitaltrends

For a billion dollars or so, the taxpayer could have owned 5 commercially successful websites.

Instead, we have a clunky site that still doesn't deliver as promised, and no one likes.

UPDATE [HGS]: One other feature that FaceBook, Twitter and LinkedIn share are deep commitments to security. And while not perfectly secure, they are at least accountable to their users. And, of course, we have choices: there's no law that forces us to use any of these services.

On the other hand, the ObamaTax forces us to buy health insurance, and folks who qualify for subsidies are forced to set up an account at the 404Care.gov site to use them.

Which, as FoIB Holly R tips us, may be a problem:

"A Romanian attacker hacked the Vermont health exchange’s development server last December, gaining access at least 15 times and going undetected for a month ... CGI Group, the tech firm hired to build Vermont Health Connect, described the risk as “high” in a report about the attack."

Now, where have we heard about this CGI outfit before? Oh, yeah.