CO-OPs: That flushing sound you hear...

Last month, we again noted that CO-OP's (Consumer Operated and Oriented Plans) were in financial trouble:

"[O]nly one Co-op, Maine Community Health Options, reported both favorable underwriting and net income at $10.9 million. All other Co-ops reported both underwriting and net losses"

As the saying goes "that which can't go on, won't." And so we find ourselves (unsurprisingly) at the edge of a cliff:

"Ominous signs are proliferating among 22 Obamacare health insurance co-ops of imminent financial collapses that could leave more than a million Americans without coverage"

So, while everyone's eyes are on SCOTUS, another major piece of The ObamaTax is facing its demise. And of course, that means all those taxpayer dollars down the terlit.

And just how many tax dollars?

Well:

"[A]n Obamacare co-op that defaulted earlier this year, suffering $163 million in operating losses in a single year ... net losses for the co-ops reached a record $614 million in 2014"

Yes, yes: petty cash to the DC bureauweenies, but actual, hard earned dollars to thee and me.

What's particularly troubling is that "[t]he figure is nearly three times the $234 million in losses suffered through the first three quarters of 2014 ... It means that the burn rate for the experimental Obamacare co-ops is quickening."

Maybe that's a good thing, though: the faster it burns up, the sooner we can start having a serious discussion about alternatives (and reality).

Narrowly Framing LTCi (Part 1)

Our good friend David Williams has written a blistering review of a recent WSJ article on why people aren't buying Long Term Care insurance (LTCi). Before addressing his concerns, I'll offer my own thoughts on the piece:

■ Based on the results of their study, Drs Olivia Mitchell and Daniel Gottlieb "found that many people regard long-term-care insurance as having no real value if ultimately the payouts aren’t needed.”

It's said that people rarely buy insurance: it must be sold (to them). This would certainly hold true regarding LTCi; as agents, we do a terrible job of selling it, which seems to validate this particular conclusion.

■ The article goes on to note that "instead of looking at long-term-care insurance primarily as financial protection, many people think of it as an investment—and a bad one at that." And they're right, of course: it is a terrible investment. But then, a dump truck is a lousy commuter vehicle, and my oven does a terrible job of washing my dishes (well, there was this one time I inadvertently left a plate in on the "self-clean" cycle, but that's another story).

Insurance is a risk-management tool, not an investment. No one expects to make a profit on their homeowner’s policy, either, but we still insure our homes. That's because, as David points out, the downside of a catastrophic loss far outweighs the cost of a policy.

■ The real meat of the article, though, and the part with which David seems most frustrated, is this:

"[O]ur research suggests that some consumers’ rejection of long-term-care insurance is based on what psychologists call “narrow framing,” or people’s tendency to exclude key factors when making decisions."

As the authors point out, this is often the case when faced with making a decision about something as complicated as LTCi. It is much easier to convince oneself that "if I can't understand it, I must not really need it." Something about "the path of least resistance" comes to mind.

Where I think the conclusions fall apart is this rather innocuous-sounding sentence: "[W]e believe that insurers could better position their products in the marketplace by providing more information to consumers regarding the high probability of needing care, and the high costs of such care."

Bullcrap.

For one thing, we already do that: look at any product brochure or marketing piece, and the stats are right there in big bold letters, charts and graphs. It seems to me that piling on would simply reinforce the "narrow framer" mindset.

The authors do get this one right: "focus more marketing toward adult children whose parents will likely require nursing-home care;" the idea being that they will pay for their parents’ policy as a means of preserving their parents' estate (and thus their own inheritance). The problem with this strategy is that you still have to get the parents' buy-in, and who's to say that they're not "narrow framers" themselves?

Finally, the article suggests that insurers should "emphasize policies that provide benefits in addition to protection for long-term-care costs. For example, more policies could include retirement income payouts or life insurance"

This skirts the issue, because the more benefits you throw on a plan, the more expensive it's going to be (whether broken out as riders or simply "baked into the cake"). Making LTCi more expensive seems counter-productive.

Interestingly, the article fails to mention one of the most valuable, easily understood benefits of LTCi, one which addresses pretty much all of their concerns: the Partnership Program. Pointing out that a properly constructed plan will help keep the Medicaid folks at bay makes for a very compelling argument that even "narrow framers" would find hard to resist.

Okay, so that's the WSJ; what about our friend David? Well, seeing as how this post is up to almost 700 words already, click here for Part 2.

UPDATE: David has graciously linked back to this post. Thanks, David!

Promises, Promises

If you like your health insurance plan you can keep your health insurance plan. Blah, blah, blah .........

Obamacare was going to fix all that was wrong with health insurance. No more plans that exclude coverage or cause consumers to go bankrupt over unpaid medical bills.

Tell that to Marlene Allen.

Marlene Allen thought she had decent medical coverage after she fell in December and broke her wrist. She had come in from walking the dogs. It was wet. The fracture needed surgery and screws and a plate.

Weeks later, she learned her employer health plan would cover nothing. Not the initial doctor visit, not the outpatient surgery, not the anesthesiology. She had $19,000 in bills. - Kaiser Health News

And her employer health insurance plan paid .................. $0.

The employer plan only met the spirit of the law in providing minimum essential coverage. In this case the minimum was "Preventive Services Only".

That's what her insurance card said. I guess she didn't read the card or the summary of benefits before signing up for this minimum coverage.

To make matters worse, the advice given by the folks at MNsure was less than stellar.

Actually it was downright criminal.

Except there is no one to be held accountable at these exchanges. You place your bets and they take your money.

After she learned that her work plan covered hardly anything and tried to get back on a marketplace policy, MNsure told her she’s not eligible for subsidies to buy it. Wrong again.“Horrible situation,” said Sabrina Corlette, project director at Georgetown University’s Center on Health Insurance Reforms. It “does make you wonder about the training these call-center folks are getting.”

Yeah, it does.

But didn't the president say buying health insurance was as easy as going online and buying an airplane ticket? How much training to ticket agents get?

I don't know but I suspect it is more than these exchange phone clerks get.

Aetna exiting small group arena?

Well, how else to explain this:

"A new producer service fee arrangement introduced by Aetna looks to eliminate broker commissions on small-group business ... The Producer Service Fee model requires brokers and their clients to negotiate a service fee that will be paid by the customer/employer to Aetna, and then paid out by Aetna to the broker."

Right after they skim off their vig, I'm sure. But what's behind this?

Well:

"They are specifically angling to say that we do not represent them, that we would be engaged by the customer and that therefore they have absolutely no obligation to pay us"

Sounds about right.

Of course, it's Aetna's prerogative to do pretty much anything it likes, but there are always those pesky consequences. For one thing, it's possible (likely?) that this violates MLR requirements.

How's that?

Well, premiums are calculated based on a group's demographics, location and the like, but they also include the commission. Nothing in the announcement indicates that premiums will be reduced based on the carrier's lower cost (perhaps they're emulating the old Blue Cross model?).

I haven't received my copy yet, so I'll withhold judgement until then. But I'm pretty sure I know my response should this prove out.

Completely Asinine Carrier Trick

So, Medical Mutual of Ohio sent me a new Broker Agreement form (essentially the contract that allows me to sell their products and receive a commission for doing so). Very standard, very simple, no big deal.

Except:

The form is 13 pages long, and only 3 of them require any input (name and contact info, signature). So, I print off and complete those 3 pages, scan them back in (and could somebody explain the rocket surgery in emailing an electronic form which then needs to be printed out, then scanned back in?) and hit the send button.

Easy peasy lemon squeazy.

Or so I thought.

This morning, I'm greeted with this:

Good Morning
Our legal department requires at all  13 pages are returned .

I have attached a new blank document for your use

Please complete
Page 1 – List your name  
Page 11 – your contact information
Page 13 – Sign and print your name and added your NPN Number

Return all  13 pages please

Thank you

Um, Einstein's? Those were the three pages I sent you; the rest is boilerplate. But I'm now supposed to print out 10 more pages of your idiotic verbiage? How bad is it when I'm complaining about killing trees?

Sheesh.

Health Wonk Review: Tinker's Ready edition

Boston Health News blogger Tinker Ready hosts this week's roundup of of wonky posts, with an emphasis on the upcoming King/Burwell SCOTUS case. As usual, the posts are interesting and thought-provoking (and don't miss the roll-out of a new term: "horrendoma").

Great job, TR!

An embarrassment of riches linkage

■ Who says crime doesn't pay? Oh, I guess that would be "Tracie Yvette Clay, 46, chief executive of N.C. Behavioral Health and Counseling Services" who's just been sent to the slammer for the next half-dozen years.

Why, you ask?

Well, as FoIB Jeff M tips us, Ms Clay admitted that she's "submitted claims for services for at least 56 clients – none of whom received the services."

And the value of those not-actually-provided services? A cool million dollars. Easy come, easy go.

■ For those following the Halbig/King/Burntwell saga, here's some perspective: "Only 1 out of 5 whose insurance costs grew because of obamacare got subsidies."

That is "the subsidies also served to mask the significant health insurance premium increases that would inevitably result from the law’s new insurance benefit requirements and regulations."

Of course, the current meme-of-the-day is that current rate hikes are "modest." Try telling that to my clients facing double-digit increases, and essentailly no options if they want to maintain comparable coverage.

■ And in Blast-From-The-Past news, the home of RomneyCare continues to embarrass itself:

"MassHealth squandered more than $500M ... The state’s Medicaid program squandered more than $500 million over a five-year span ... the state paying twice for the same service on nearly 1.5 million occasions"

Could be worse, of course.