Note: The following commentary appears in the February 20, 2012 edition of Business Insurance Magazine as part of its special spotlight report on self-insurance for the middle market.
Small and midsize companies are looking at self-insurance as a cost-effective health care benefits solution as Patient Protection and Affordable Care Act deadlines approach. Michael W. Ferguson serves as chief operating officer for the Self-Insurance Institute of America Inc., looks at facts and myths surrounding the decision to self-insure.
As more smaller and midsize companies look to self-insurance solutions to control escalating group health care costs in the wake of passage of the Patient Protection and Affordable Care Act, this proactive risk management approach has attracted increased negative attention from traditional health insurance industry and state regulators who warn of various calamities.
Of course, this criticism is largely predictable, as health insurance carriers are worried about market-share erosion, and state regulators don�t like the fact they cannot directly regulate self-insured group health plans because of Employee Retirement Income Security Act (ERISA) pre-emption. Nonetheless, it�s worth pointing out some of the more frequently repeated canards in order to help clear up any confusion this may cause for employers considering self-insurance.
But first the disclaimer: Self-insurance is not the best option for every employer, regardless of size. In fact, it could be a very bad option based on a variety of considerations. In this regard, it is highly recommended that employers engage in the same type of thorough due diligence they would rely on for any other major financial decision.
That said, let�s jump in and separate some important myths from realities.
Perhaps the most unfortunate allegation is that a primary motive for many employers to self-insure is that they can escape regulation, raising consumer protection concerns. While it is true that self-insured plans are not subject to state benefit mandates, there is no evidence to suggest that self-insured employers scrimp on covered benefits. In fact, it is widely acknowledged that self-insured plans incorporate more robust coverage terms for key health services because they have the ability to customize their plans to meet the specific needs of their employees.
And for employers switching to self-insurance since the passage of PPACA, they don�t evade any new substantive federal regulations�except those specifically geared for commercial health insurance carriers�because, by definition, they would establish �non-grandfathered� plans.
The reality is that self-insured employers actually subject themselves to more regulatory requirements because they are governed by ERISA, which prescribes strict federal rules for plan fiduciaries, among other requirements designed to protect the interests of plan participants.
Some critics also claim that self-insured health plans are more cost-effective because they deny claims at a higher rate than fully insured plans. But in a report issued by the U.S. Department of Health & Human Services last year, HHS-contracted researchers from RAND Corp. concluded that there is no evidence of such disparity.
Then there�s the belief that self-insured plan participants pay higher premiums than their fully insured counterparts. The available data does not support this conclusion, either.
As part of a U.S. Department of Labor report on self-insured health plans released last year, Deloitte Financial Advisory Services L.L.P. and Advanced Analytical Consulting Group, Inc. found that from 2009 to 2010 for employers with more than 200 covered lives, the average per employee premium contribution to be covered by fully-insured plans increased by $808 compared to average increase of $248 for self-insured premiums.
Most recently, influential academics and public policymakers predicted that such self-insured plans would contribute to adverse selection when insurance market reforms are fully implemented, suggesting that employers would switch back and forth between self-insured and exchange-offered plans based on their claims experience on a yearly basis.
That�s a nice conspiracy theory for sure, but it does not match up with marketplace realities. The fact is that due to ongoing administrative and compliance requirements, employers cannot simply switch their self-insured plans on and off.
Moreover, once an employer transitions to a fully insured health plan, it loses possession of claims data, which makes it more difficult to re-establish a self-insured plan in the future regardless of other considerations.
Claims data is arguably the most important health plan asset, as it can help employers control future health plan costs and can be used to customized plan design details. Giving up this asset over one bad claim year is not a decision to be taken lightly by plan sponsors.
The health care marketplace is certainly evolving, creating shifting roles for self-insurers, commercial health insurance companies and public sector payers. All three industry segments contribute in different ways to ensure that coverage is as available and affordable for the widest population possible.
Those who disseminate misleading information about any of these segments do a disservice to the ongoing public dialogue on how to improve the country�s health care system.
Thursday, February 16, 2012
Saturday, December 31, 2011
Michigan Health Plan Tax Lawsuit Tests Business Community Priorities
A lawsuit filed last week in Federal Court seeking a declaration that Michigan�s Health Insurance Claims Assessment Act is preempted by the Employee Retirement Income Security Act (ERISA) will certainly test existing legal precedent, but perhaps the more interesting test will be how the business community responds.
This blog previously reported that officials from one prominent business organization in the state had no intention of pushing back against the legislation at the time citing both internal and external political concerns. That said, they suggested that there would likely be �private� support of a legal challenge from within their organization if in fact the law was challenged.
It will be interesting to see how this �leading from behind� approach plays out. In a conversation with my source shortly before the lawsuit was filed, it was noted that Michigan self-insured employers are now starting to pay more attention to the law and what it means to them.
More specifically, this blog has learned that one prominent multi-state self-insured employer based in Michigan calculated its yearly projected expenses to comply with new law to be more than $250,000. Of course, the administrative headaches are just a bonus.
But even with such a direct adverse impact on their company, senior company executives remain guarded about expressing opposition to the new law.
Now that the legal flaws of new law have been laid bare in the detailed complaint filed against the state and word is starting to get out about its practical impact, we�ll see if any heads pop up out of the foxholes.
And while the this legal challenge is important to self-insured employers in Michigan and to other entities that pay healthclaims for Michigan residents for services received within the state, its significance extends more broadly.
Michigan is not the only state that is strapped for cash and looking for new revenue streams. If its new health plan tax law goes unchallenged, this will likely embolden other states to consider this same approach and the cornerstone of ERISA preemption will be greatly compromised, and with it, the viability of self-insured health plans.
I suspect that if Michigan self-insured employers in large numbers estimated the financial impact to their balance sheets if they were forced to switch to fully-insured health plans and publicly communicated this to policy-makers and business association leaders early on this train would have been pulled off the track before arriving at the courthouse door.
The state has declined to comment on the lawsuit thus far but is required to file a formal legal response in the next 30 days so it will soon become clear how they intend to fight this challenge.
Perhaps the business community may yet demonstrate some clarity with regard to where it stands.
This blog previously reported that officials from one prominent business organization in the state had no intention of pushing back against the legislation at the time citing both internal and external political concerns. That said, they suggested that there would likely be �private� support of a legal challenge from within their organization if in fact the law was challenged.
It will be interesting to see how this �leading from behind� approach plays out. In a conversation with my source shortly before the lawsuit was filed, it was noted that Michigan self-insured employers are now starting to pay more attention to the law and what it means to them.
More specifically, this blog has learned that one prominent multi-state self-insured employer based in Michigan calculated its yearly projected expenses to comply with new law to be more than $250,000. Of course, the administrative headaches are just a bonus.
But even with such a direct adverse impact on their company, senior company executives remain guarded about expressing opposition to the new law.
Now that the legal flaws of new law have been laid bare in the detailed complaint filed against the state and word is starting to get out about its practical impact, we�ll see if any heads pop up out of the foxholes.
And while the this legal challenge is important to self-insured employers in Michigan and to other entities that pay healthclaims for Michigan residents for services received within the state, its significance extends more broadly.
Michigan is not the only state that is strapped for cash and looking for new revenue streams. If its new health plan tax law goes unchallenged, this will likely embolden other states to consider this same approach and the cornerstone of ERISA preemption will be greatly compromised, and with it, the viability of self-insured health plans.
I suspect that if Michigan self-insured employers in large numbers estimated the financial impact to their balance sheets if they were forced to switch to fully-insured health plans and publicly communicated this to policy-makers and business association leaders early on this train would have been pulled off the track before arriving at the courthouse door.
The state has declined to comment on the lawsuit thus far but is required to file a formal legal response in the next 30 days so it will soon become clear how they intend to fight this challenge.
Perhaps the business community may yet demonstrate some clarity with regard to where it stands.
Friday, December 30, 2011
A Tale of Two Domiciles...Revisted
We suggested a narrative earlier this year that two southern captive insurance domiciles would be worth watching to compare and contrast based on insurance commissioner appointments in each state. Let�s review.
The captive industry in South Carolina fell on hard times during the regime of Insurance Commissioner Scott Richardson who left office at the end of 2010. When newly-elected Governor Nikki Haley named David Black as his replacement in February, this blog reflected the puzzlement expressed by many industry and political insiders.
Mr. Black was a largely unknown quantity aside from being the CEO of an inconsequential life insurance company.
But the sparse resume and lack of ART industry credentials didn�t deter Governor Haley from appointing Mr. Black and pronouncing him as a savior. Consider her comments when naming him to the position where she said �Understanding the importance of your industry, I chose David Black to lead the Department of Insurance. He has the energy and capability to revitalize the captive industry for our state.�
As it turned out, he had neither
Earlier this week, Mr. Black abruptly announced his resignation to his staff via e-mail giving no specific reason for his decision.
So now Governor Haley has a chance for a second bite of the apple to get it right. This means naming someone to the position who is willing and capable to shake up the bureaucracy within the department and establish a firewall between the regulation of traditional insurance companies and alternative risk transfer programs, as originally envisioned by former commissioner Ernie Csiszar more than a decade ago.
A tall order for sure and we�ll be watching.
A very different story continues to play out in nearby Tennessee where Governor Bill Haslam tapped Julie Mix McPeak to head up the insurance department in that state.
This blog noted that Ms. McPeak had both the credentials and reputation to turn heads within the ART marketplace when word of her appointment surfaced. But her future success was not assured.
The first order of business as it related to the ART industry was to shepherd a bill through the Legislature that made comprehensive updates to the state�s captive statute. This effort proved more difficult than expected but Ms. McPeak was up to the task and that legislation, which she helped draft, was signed into law.
Since that development, she has been working methodically to assemble a top notch regulatory team and now most of the key positions have been filled and she introduced these individuals at an industry event earlier this month.
So armed with a progressive captive stature and a regulatory team inspired to transform Tennessee into a premiere captive insurance domicile, the stage has now been set for her to make it happen.
But let�s not get ahead of ourselves as there are certain to be pitfalls ahead as the domicile finds its footing under Ms. McPeak�s leadership in 2012. That said, the fact that leadership is on display is certainly refreshing for those vested in the growth of the ART marketplace.
This tale of two domiciles will continue.
The captive industry in South Carolina fell on hard times during the regime of Insurance Commissioner Scott Richardson who left office at the end of 2010. When newly-elected Governor Nikki Haley named David Black as his replacement in February, this blog reflected the puzzlement expressed by many industry and political insiders.
Mr. Black was a largely unknown quantity aside from being the CEO of an inconsequential life insurance company.
But the sparse resume and lack of ART industry credentials didn�t deter Governor Haley from appointing Mr. Black and pronouncing him as a savior. Consider her comments when naming him to the position where she said �Understanding the importance of your industry, I chose David Black to lead the Department of Insurance. He has the energy and capability to revitalize the captive industry for our state.�
As it turned out, he had neither
Earlier this week, Mr. Black abruptly announced his resignation to his staff via e-mail giving no specific reason for his decision.
So now Governor Haley has a chance for a second bite of the apple to get it right. This means naming someone to the position who is willing and capable to shake up the bureaucracy within the department and establish a firewall between the regulation of traditional insurance companies and alternative risk transfer programs, as originally envisioned by former commissioner Ernie Csiszar more than a decade ago.
A tall order for sure and we�ll be watching.
A very different story continues to play out in nearby Tennessee where Governor Bill Haslam tapped Julie Mix McPeak to head up the insurance department in that state.
This blog noted that Ms. McPeak had both the credentials and reputation to turn heads within the ART marketplace when word of her appointment surfaced. But her future success was not assured.
The first order of business as it related to the ART industry was to shepherd a bill through the Legislature that made comprehensive updates to the state�s captive statute. This effort proved more difficult than expected but Ms. McPeak was up to the task and that legislation, which she helped draft, was signed into law.
Since that development, she has been working methodically to assemble a top notch regulatory team and now most of the key positions have been filled and she introduced these individuals at an industry event earlier this month.
So armed with a progressive captive stature and a regulatory team inspired to transform Tennessee into a premiere captive insurance domicile, the stage has now been set for her to make it happen.
But let�s not get ahead of ourselves as there are certain to be pitfalls ahead as the domicile finds its footing under Ms. McPeak�s leadership in 2012. That said, the fact that leadership is on display is certainly refreshing for those vested in the growth of the ART marketplace.
This tale of two domiciles will continue.
Saturday, September 10, 2011
NAIC Provides Forum for Ivory Tower Attack on Self-Insurance
The National Association of Insurance Commissioners (NAIC) has never been known as an organization where the self-insurance/alternative risk transfer industry is treated fairly, but its penchant for bias became even more visible this past week. Worse yet, this bias is now being fomented by an �ivory tower� expert.
Professor Timothy Stoltzfus Jost is the designated �consumer representative� on the NAIC�s ERISA (B) Subgroup , which is tasked with developing various policy recommendations related to how states should adapt their insurance regulations to better coordinate with PPACA implementation. The esteemed professor is not shy in sharing his opinion that smaller self-insured group health plans, facilitated by stop-loss insurance, should be made extinct.
During the Workgroup�s last conference call, Professor Jost presented a formal statement entitled The Affordable Care Act and Stop-Loss Insurance. This scholarly work was quite the hit piece on self-insurance disguised with big words, extensive footnoting and misleading legal references.
His central thesis is that smaller employers should not be allowed to self-insure because they do so primarily to escape state regulation, and going forward to sidestep new PPACA regulation. He also pushes the dubious argument that self-insured plans contribute to adverse selection (see my earlier blog post on this subject).
Virtually all of Professor Jost�s points can and will be rebutted privately and publicly as this NAIC policy development process moves forward, but first let�s take some time to consider the source.
He is currently a law professor at the Washington and Lee University of Law, with multiple other academic appointments dating back to 1979. Along the way, he has written several books and academic papers on the subject of health care with titles such as The Threats Facing our Public Health Care Programs and a Rights-Based Response; and Health Care at Risk: a Critique of the Consumer-Driven Movement.
And by the way, he is a graduate of the University of California at Santa Cruz. In case you are not familiar with this school, it makes U.C. Berkley look like a bastion of conservatism.
So what about private sector experience over his 35 year career? You guessed it, zero. How about past experience as a regulator who at least could interact with the private sector? No again. What we have here is the classic liberal elite academic who looks at the world through prisms of theory and ideology.
Professor Jost holds himself out to be a patient�s rights advocate and clearly views the NAIC as a forum to present his �ivory tower� perspective. OK fine, there�s certainly room for a diversity of qualified opinions as part of the policy development process.
The problem is that while Professor Jost may well have valid perspectives to contribute on true consumer (patient) protection issues, he�s out of his league in commenting on how health care delivery should be financed.
Moreover, if he was truly concerned about the ability of individuals to receive quality, affordable health care, Professor Jost should actually be a proponent of self-insured health plans (regardless of size) because these plans generally do a better job on both counts as compared to the fully-insured marketplace.
It appears the professor is in need of some timely continuing education.
Professor Timothy Stoltzfus Jost is the designated �consumer representative� on the NAIC�s ERISA (B) Subgroup , which is tasked with developing various policy recommendations related to how states should adapt their insurance regulations to better coordinate with PPACA implementation. The esteemed professor is not shy in sharing his opinion that smaller self-insured group health plans, facilitated by stop-loss insurance, should be made extinct.
During the Workgroup�s last conference call, Professor Jost presented a formal statement entitled The Affordable Care Act and Stop-Loss Insurance. This scholarly work was quite the hit piece on self-insurance disguised with big words, extensive footnoting and misleading legal references.
His central thesis is that smaller employers should not be allowed to self-insure because they do so primarily to escape state regulation, and going forward to sidestep new PPACA regulation. He also pushes the dubious argument that self-insured plans contribute to adverse selection (see my earlier blog post on this subject).
Virtually all of Professor Jost�s points can and will be rebutted privately and publicly as this NAIC policy development process moves forward, but first let�s take some time to consider the source.
He is currently a law professor at the Washington and Lee University of Law, with multiple other academic appointments dating back to 1979. Along the way, he has written several books and academic papers on the subject of health care with titles such as The Threats Facing our Public Health Care Programs and a Rights-Based Response; and Health Care at Risk: a Critique of the Consumer-Driven Movement.
And by the way, he is a graduate of the University of California at Santa Cruz. In case you are not familiar with this school, it makes U.C. Berkley look like a bastion of conservatism.
So what about private sector experience over his 35 year career? You guessed it, zero. How about past experience as a regulator who at least could interact with the private sector? No again. What we have here is the classic liberal elite academic who looks at the world through prisms of theory and ideology.
Professor Jost holds himself out to be a patient�s rights advocate and clearly views the NAIC as a forum to present his �ivory tower� perspective. OK fine, there�s certainly room for a diversity of qualified opinions as part of the policy development process.
The problem is that while Professor Jost may well have valid perspectives to contribute on true consumer (patient) protection issues, he�s out of his league in commenting on how health care delivery should be financed.
Moreover, if he was truly concerned about the ability of individuals to receive quality, affordable health care, Professor Jost should actually be a proponent of self-insured health plans (regardless of size) because these plans generally do a better job on both counts as compared to the fully-insured marketplace.
It appears the professor is in need of some timely continuing education.
RRG Legislation Snagged by Dodd-Frank Creation
After some initial good progress in moving federal legislation to modernize the Liability Risk Retention Act (LRRA), a new rhetorical roadblock has been raised.
The Risk Retention Modernization Act (H.R. 2126) includes a dispute resolution provision whereby RRGs who believe they are being illegally regulated in non-domiciliary states can access the equivalent of a federal arbitration process as an alternative to initiating costly legal action.
An earlier version of the legislation provided that this dispute resolution mechanism would be administered within the Treasury Department due to technical jurisdiction requirements, but left discretion Treasury to fit this function in as part their exiting organizational chart.
Fast forward to the recent passage of the Dodd-Frank financial reform legislation, which among other things created a new Federal Insurance Office (FIO) to be housed within the Treasury Department. As a result of this development, the current version of the legislation specifically designates FIO as the entity responsible to arbitrate RRG disputes with state regulators.
Supporters of the legislation have always known that there would be some push back in Congress from members concerned that such a dispute resolution would infringe on the authority of state insurance regulators. Of course, the opposite is actually true and this position has gained traction in recent months.
But just as the policy argument has largely been settled, at least one member of Congress key to the legislation�s eventual message has raised a new concern. In a meeting earlier this week to discuss the legislation, Rep. Judy Biggert (R-IL), chairwoman of the House Subcommittee of Capital Markets within the House Financial Services Committee, voiced strong concerns about this new responsibility assigned to the FIO.
Her objection was not really specific to RRG regulation, but rather reflects a broader view held by many Republicans that the FIO is being given too much authority. In hindsight, this objection was not particularly surprising.
While PPACA has garnered the lion share of public attention for those critical of government expanding its regulatory reach, the distaste for Dodd-Frank is significant among most Republican members of Congress. As a result, any manifestation of this law, such as the FIO, can spark a reflexive push back as demonstrated by Rep. Biggert�s comments.
It is important to note that this new wrinkle does not mean that H.R. 2126 cannot pass. The lobbying process on Capitol Hill is inherently complicated and this is just the latest example.
In the end, if the case can be made that the practical advantages this legislation offers to small and mid-sized companies trump more abstract political concerns, the LRRA will be successfully modernized.
Stay tuned for additional inside reports on how this legislation is progressing on Capitol Hill.
The Risk Retention Modernization Act (H.R. 2126) includes a dispute resolution provision whereby RRGs who believe they are being illegally regulated in non-domiciliary states can access the equivalent of a federal arbitration process as an alternative to initiating costly legal action.
An earlier version of the legislation provided that this dispute resolution mechanism would be administered within the Treasury Department due to technical jurisdiction requirements, but left discretion Treasury to fit this function in as part their exiting organizational chart.
Fast forward to the recent passage of the Dodd-Frank financial reform legislation, which among other things created a new Federal Insurance Office (FIO) to be housed within the Treasury Department. As a result of this development, the current version of the legislation specifically designates FIO as the entity responsible to arbitrate RRG disputes with state regulators.
Supporters of the legislation have always known that there would be some push back in Congress from members concerned that such a dispute resolution would infringe on the authority of state insurance regulators. Of course, the opposite is actually true and this position has gained traction in recent months.
But just as the policy argument has largely been settled, at least one member of Congress key to the legislation�s eventual message has raised a new concern. In a meeting earlier this week to discuss the legislation, Rep. Judy Biggert (R-IL), chairwoman of the House Subcommittee of Capital Markets within the House Financial Services Committee, voiced strong concerns about this new responsibility assigned to the FIO.
Her objection was not really specific to RRG regulation, but rather reflects a broader view held by many Republicans that the FIO is being given too much authority. In hindsight, this objection was not particularly surprising.
While PPACA has garnered the lion share of public attention for those critical of government expanding its regulatory reach, the distaste for Dodd-Frank is significant among most Republican members of Congress. As a result, any manifestation of this law, such as the FIO, can spark a reflexive push back as demonstrated by Rep. Biggert�s comments.
It is important to note that this new wrinkle does not mean that H.R. 2126 cannot pass. The lobbying process on Capitol Hill is inherently complicated and this is just the latest example.
In the end, if the case can be made that the practical advantages this legislation offers to small and mid-sized companies trump more abstract political concerns, the LRRA will be successfully modernized.
Stay tuned for additional inside reports on how this legislation is progressing on Capitol Hill.
Friday, September 9, 2011
Regulatory Overreach Compromises Workplace Safety Initiatives
In case you had any doubt that the current public debate over the scope of federal regulation is more about political ideology rather than practical reality, look no further than OSHA�s ramped up oversight of workplace safety issues.
Now on the surface, this may sound like a laudable focus because almost everyone agrees that there is a role for government in making sure that sensible workplace safety standards are established and adhered to. But of course, in this current political climate Obama regulators just don�t know when to say when.
Specifically, OSHA has recently started to subpoena workplace safety audits prepared by workers� compensation self-insurers and insurance carriers. Keep in mind that that these audits are prepared on voluntary basis so that employers/insurers are better able to proactively address any safety deficiencies that may exist. Such audits are particularly important tools for workers� compensation self-insurers because they �own� every dollar saved on payments to injured workers.
Historically, OSHA has not attempted to access such audits because everyone understood that employers would likely stop preparing these risk management tools if they could be used against them in regulatory enforcement and/or legal proceedings.
This precedence has been overturned by a recent federal district court ruling stating that OSHA does have the right to subpoena safety audits and related documentation. Specifically, the ruling in the case of Solis v. Grinnell Mutual Reinsurance Company concluded that audit subpoena are generally enforceable if:
1) They reasonably relate to an investigation within OSHA�s authority;
2) The requested documents are relevant to OSHA�s investigation;
3) The request is not too vague
4) Proper administrative procedures have been followed; and
5) The subpoena does not demand information for an �illegitimate purpose�
According to OSHA�s internal policy regarding voluntary self-audits, the agency will not �routinely� request such audits at the beginning of an inspection, or use the audits to identify hazards to inspect.
But now with a favorable court ruling in their back pocket, it�s very reasonable to expect that OSHA regulators will, in fact, make safety audit subpoenas a routine part of their investigative process.
Of course, and ironically, the real victims are the workers as many employers are likely to curtail such formal audits in response to OSHA�s invasive zeal. Another classic example of �no good deed goes unpunished� apparently embraced by this administration.
Now on the surface, this may sound like a laudable focus because almost everyone agrees that there is a role for government in making sure that sensible workplace safety standards are established and adhered to. But of course, in this current political climate Obama regulators just don�t know when to say when.
Specifically, OSHA has recently started to subpoena workplace safety audits prepared by workers� compensation self-insurers and insurance carriers. Keep in mind that that these audits are prepared on voluntary basis so that employers/insurers are better able to proactively address any safety deficiencies that may exist. Such audits are particularly important tools for workers� compensation self-insurers because they �own� every dollar saved on payments to injured workers.
Historically, OSHA has not attempted to access such audits because everyone understood that employers would likely stop preparing these risk management tools if they could be used against them in regulatory enforcement and/or legal proceedings.
This precedence has been overturned by a recent federal district court ruling stating that OSHA does have the right to subpoena safety audits and related documentation. Specifically, the ruling in the case of Solis v. Grinnell Mutual Reinsurance Company concluded that audit subpoena are generally enforceable if:
1) They reasonably relate to an investigation within OSHA�s authority;
2) The requested documents are relevant to OSHA�s investigation;
3) The request is not too vague
4) Proper administrative procedures have been followed; and
5) The subpoena does not demand information for an �illegitimate purpose�
According to OSHA�s internal policy regarding voluntary self-audits, the agency will not �routinely� request such audits at the beginning of an inspection, or use the audits to identify hazards to inspect.
But now with a favorable court ruling in their back pocket, it�s very reasonable to expect that OSHA regulators will, in fact, make safety audit subpoenas a routine part of their investigative process.
Of course, and ironically, the real victims are the workers as many employers are likely to curtail such formal audits in response to OSHA�s invasive zeal. Another classic example of �no good deed goes unpunished� apparently embraced by this administration.
Thursday, September 8, 2011
Inside Politics in Michigan Demonstrate That Self-Insurance Priorities Are Too Easiliy Dealt Away
Michigan Governor Rick Snyder is poised to sign legislation that would impose a one percent tax on medical claims paid by health plans, including self-insured group health plans. This is big news and is certainly a disturbing development for those concerned about the erosion of ERISA preemption. But there is a more interesting story behind the headlines that is instructive for self-insured employers in other states as well.
In anticipation of this legislative development, I spoke with senior representatives from a leading Michigan employer organization to explore possible response options, including litigation coordination if necessary. When asked specifically what their appetite was for legal action assuming the legislation is signed into law, their answer was pretty clear � �zero.�
Given that this association represents many self-insured employers such strong push back was surprising to say the least. Then the �off the record� discussion began.
It turns out that there had been some significant wheeling and dealing between the Legislature, the governor and the business community in order to craft various budget reform initiatives designed to head off a projected deficit.
My contacts confided in me that their organization is privately opposed to the health plan tax proposal but will not go on record to say so, much less getting involved in possible litigation. They cite two reasons for this seemingly contradictory stance.
First, their membership includes health insurance companies in addition to self-insured employers and they believe an outspoken defense of self-insurers would alienate this other membership constituency. The other rationale is if the boat was rocked on this issue, then some of the other �deals� presumed to be favorable to the employer community could fall apart.
Of course, the big picture was not taken into account. They acknowledge that the immediate negative financial impact for self-insured employers is bad but manageable. Not considered was that if state efforts to tax and/or regulate self-insured health plans are left unchecked, self-insurance may cease to be an attractive option for employers in Michigan and elsewhere, which would effectively trap employers in the traditional health insurance marketplace � a much more ominous situation than being subject to a one percent tax as problematic as that may be.
My contacts appreciated this analysis and agreed that there are, in fact, bigger issues at play. That said, the bottom line is that many within the leadership of their very influential organization would likely applaud an effort to push back against the health plan tax, but this would be private support with no organizational fingerprints.
So there you have it. The very important fight over ERISA preemption has been dealt away in Michigan in favor of other business community priorities that likely are less important to employers from a P&L perspective. It�s uncertain how things will eventually play out in Michigan, but this look behind the curtain on the relationship between state employer organizations and government exemplifies why the self-insurance industry has an ongoing challenge at the state level.
While the ability of employers to self-insure is more significant than most tax and regulatory initiatives (again from a P&L perspective), self-insurance issues simply do not get much attention for state organizations, which tend to have more broad-based legislative agendas. To be fair, this is understandable because these groups generally have diverse membership constituencies and not have the resources to focus on issues that only a single constituency. Moreover, the member representatives do not generally insist that their organization put self-insurance issues front and center.
To the extent that employers can be mobilized to rattle the cages of state business associations to pay more attention to self-insurance issues we may be able to turn �private support� to visible public advocacy on the future threats that are almost certain to arise.
Let the cage rattling begin.
In anticipation of this legislative development, I spoke with senior representatives from a leading Michigan employer organization to explore possible response options, including litigation coordination if necessary. When asked specifically what their appetite was for legal action assuming the legislation is signed into law, their answer was pretty clear � �zero.�
Given that this association represents many self-insured employers such strong push back was surprising to say the least. Then the �off the record� discussion began.
It turns out that there had been some significant wheeling and dealing between the Legislature, the governor and the business community in order to craft various budget reform initiatives designed to head off a projected deficit.
My contacts confided in me that their organization is privately opposed to the health plan tax proposal but will not go on record to say so, much less getting involved in possible litigation. They cite two reasons for this seemingly contradictory stance.
First, their membership includes health insurance companies in addition to self-insured employers and they believe an outspoken defense of self-insurers would alienate this other membership constituency. The other rationale is if the boat was rocked on this issue, then some of the other �deals� presumed to be favorable to the employer community could fall apart.
Of course, the big picture was not taken into account. They acknowledge that the immediate negative financial impact for self-insured employers is bad but manageable. Not considered was that if state efforts to tax and/or regulate self-insured health plans are left unchecked, self-insurance may cease to be an attractive option for employers in Michigan and elsewhere, which would effectively trap employers in the traditional health insurance marketplace � a much more ominous situation than being subject to a one percent tax as problematic as that may be.
My contacts appreciated this analysis and agreed that there are, in fact, bigger issues at play. That said, the bottom line is that many within the leadership of their very influential organization would likely applaud an effort to push back against the health plan tax, but this would be private support with no organizational fingerprints.
So there you have it. The very important fight over ERISA preemption has been dealt away in Michigan in favor of other business community priorities that likely are less important to employers from a P&L perspective. It�s uncertain how things will eventually play out in Michigan, but this look behind the curtain on the relationship between state employer organizations and government exemplifies why the self-insurance industry has an ongoing challenge at the state level.
While the ability of employers to self-insure is more significant than most tax and regulatory initiatives (again from a P&L perspective), self-insurance issues simply do not get much attention for state organizations, which tend to have more broad-based legislative agendas. To be fair, this is understandable because these groups generally have diverse membership constituencies and not have the resources to focus on issues that only a single constituency. Moreover, the member representatives do not generally insist that their organization put self-insurance issues front and center.
To the extent that employers can be mobilized to rattle the cages of state business associations to pay more attention to self-insurance issues we may be able to turn �private support� to visible public advocacy on the future threats that are almost certain to arise.
Let the cage rattling begin.
Friday, April 30, 2010
Saturday, February 13, 2010
In Canada, I simply call my doctor and make an appointment
My husband & I live in Canada but are in Arizona for 3 months this winter. We took out Blue Cross travel insurance. I have had 2 medical emergencies...the first one Blue Cross paid but I had to pay the second one.
When I paid the $125 to see a doctor I thought "for some families this would be like making a decision to go to the doctor when you needed medical attention or putting food on the table for your family."
In Canada, I would simply call and make and appointment to see my Dr. If it was an emergency, I'd be in the same day - otherwise it would be a case of waiting till the next day. Then I would receive care, a prescription or whatever. We never see a bill or know the cost involved. 18 years ago I was diagnosed with breast cancer. I had surgery within 2 weeks of my diagnosis and then had radiation, took Tamoxifin for 5 years. I picked up a 3 month supply at our local cancer clinic and went on my way.
No bills, no stress or wondering if I would be covered. And EVERYONE has care...it's worth the extra we pay in taxes for such piece of mind!!
Anonymous
Arizona
Cross posted from http://healthcare.democratsabroad.ca/
When I paid the $125 to see a doctor I thought "for some families this would be like making a decision to go to the doctor when you needed medical attention or putting food on the table for your family."
In Canada, I would simply call and make and appointment to see my Dr. If it was an emergency, I'd be in the same day - otherwise it would be a case of waiting till the next day. Then I would receive care, a prescription or whatever. We never see a bill or know the cost involved. 18 years ago I was diagnosed with breast cancer. I had surgery within 2 weeks of my diagnosis and then had radiation, took Tamoxifin for 5 years. I picked up a 3 month supply at our local cancer clinic and went on my way.
No bills, no stress or wondering if I would be covered. And EVERYONE has care...it's worth the extra we pay in taxes for such piece of mind!!
Anonymous
Arizona
Cross posted from http://healthcare.democratsabroad.ca/
Write a letter to your Congressperson
This post is from Bob Haiducek, who is responsible for the website www.medicareforall.org and who runs the Million Letters for Health Care campaign. Bob's website allows you to do what he calls "sign up to stand up for single-payer, Medicare for All", so I recommend that you sign up to be counted as a supporter in whatever your U.S. Congressional District is in the U.S. Bob sends 1 helpful e-mail each month with a fresh set of suggestions that you can use directly or for an idea to personalize your letter.
Any American in any country can participate. If you don't want to pay for the overseas postage to actually send the monthly letter, you could do a copy and past each month of your letter to your U.S. Representative into an e-mail and do a cc: or bcc: to bob@medicareforall.org. Bob will get your letter to your U.S. Representative ... in an envelope in the U.S. Mail if the donations to his website allow him to be able to handle that expense.
Following are excerpts of one of Bob's monthly helpful reminders. You can use ideas from the list below, write your own letter, or go to www.medicareforall.org to download a sample letter.
==== SUGGESTION: select one of these to write or use as an idea for what you write ====
September 2009
People in other free-market countries wonder why we have not implemented low-cost high-quality health care for all like they did. It's time for us to act!
We know from President Obama's position in 2003 that he will sign if people communicate in every Congressional District. We are now communicating!
People need to automatically have full health care for their entire lives to improve the quality of life and help people have good preventive care.
People need to automatically have full health care for their entire lives to improve the quality of life without having any major medical bills.
We want this one action that will save families up to $8,000 per year in addition to possibly saving up to $2,500 per year with additional actions.
==============================
For Your Reference in Conversations --------
If you are among fellow activists, please consider bringing up the subject of the contents of this "Help Get Care" document:
http://www.medicareforall.org/files/helpgetcare.pdf
or its corresponding web page.
If you are among people who are supportive of single-payer and would like to know more, please consider these documents:
http://www.medicareforall.org/files/benefits.pdf
or its corresponding web page
and
http://www.medicareforall.org/files/twochoices.pdf
or its corresponding web page.
Any American in any country can participate. If you don't want to pay for the overseas postage to actually send the monthly letter, you could do a copy and past each month of your letter to your U.S. Representative into an e-mail and do a cc: or bcc: to bob@medicareforall.org. Bob will get your letter to your U.S. Representative ... in an envelope in the U.S. Mail if the donations to his website allow him to be able to handle that expense.
Following are excerpts of one of Bob's monthly helpful reminders. You can use ideas from the list below, write your own letter, or go to www.medicareforall.org to download a sample letter.
==== SUGGESTION: select one of these to write or use as an idea for what you write ====
September 2009
People in other free-market countries wonder why we have not implemented low-cost high-quality health care for all like they did. It's time for us to act!
We know from President Obama's position in 2003 that he will sign if people communicate in every Congressional District. We are now communicating!
People need to automatically have full health care for their entire lives to improve the quality of life and help people have good preventive care.
People need to automatically have full health care for their entire lives to improve the quality of life without having any major medical bills.
We want this one action that will save families up to $8,000 per year in addition to possibly saving up to $2,500 per year with additional actions.
==============================
For Your Reference in Conversations --------
If you are among fellow activists, please consider bringing up the subject of the contents of this "Help Get Care" document:
http://www.medicareforall.org/files/helpgetcare.pdf
or its corresponding web page.
If you are among people who are supportive of single-payer and would like to know more, please consider these documents:
http://www.medicareforall.org/files/benefits.pdf
or its corresponding web page
and
http://www.medicareforall.org/files/twochoices.pdf
or its corresponding web page.
Thursday, February 11, 2010
How to Review Your Homeowners Insurance Renewal Statement
For most of us, our home is our single largest and most important investment. Many of us have poured thousands of dollars and countless hours into maintaining, improving and (hopefully) paying off our homes. Many people own their homes free of any mortgage. These assets are pure equity. Certainly its worthwhile to invest 15 minutes a year to be sure it's properly insured.
Thankfully, the insurance company offers you a perfect reminder and opportunity in sending out your annual renewal statement. Even if your insurance is paid by your mortgage company as part of your impound account, the insurance company still mails you a statement of renewal every year to update you with your current coverage limits and deductible.
Here's a few important steps you can take to be sure that HOME SWEET HOME is properly protected.
1. Check the basics. Check your name, address and any other description of the insured property. Make sure there's been no change of vesting or ownership that needs to be updated. Check your address to be sure no numbers are transposed.
2. Check the mortgagee clause. Here's where you can be sure that the current mortagee on your home is listed correctly. Check the lender, address and your loan number. Be sure there's no old information there. Maybe you had a HELOC (Home Equity Line of Credit) or a second mortgage that no longer applies. Be sure to get them removed.
Thankfully, the insurance company offers you a perfect reminder and opportunity in sending out your annual renewal statement. Even if your insurance is paid by your mortgage company as part of your impound account, the insurance company still mails you a statement of renewal every year to update you with your current coverage limits and deductible.
Here's a few important steps you can take to be sure that HOME SWEET HOME is properly protected.
1. Check the basics. Check your name, address and any other description of the insured property. Make sure there's been no change of vesting or ownership that needs to be updated. Check your address to be sure no numbers are transposed.
2. Check the mortgagee clause. Here's where you can be sure that the current mortagee on your home is listed correctly. Check the lender, address and your loan number. Be sure there's no old information there. Maybe you had a HELOC (Home Equity Line of Credit) or a second mortgage that no longer applies. Be sure to get them removed.
HEADS UP: Whenever you have a significant claim, the mortgage company will be one of the payees on your claim settlement check. Just that alone can be an inconvenience. But it becomes a major hassle when one of the institutions listed no longer has a vested interest in your home. The insurance company is bound by contract to include the mortgage company on all settlement checks beyond a stated threshold.
*3. Check the coverage on your home (dwelling or building). This is without question the single most important coverage to examine, consider and adjust whenever necessary. Having been an agent during the two raging firestorms in San Diego, CA in this decade, I can tell you that underinsured homes are just NO FUN! Two of my clients lost their homes in the 2003 fires and fortunately they were both adequately insured. (we call all our homeowner clients once a year to review their coverages and suggest improvements and adjustments) But I can tell you that there were literally hundreds of people in the area that were not so fortunate. Many were underinsured by over $100,000! Contractors were giving rebuilding bids on homes for $400,000 with insurance policies with limits less than $300,000. See if that doesn't tweak your financial well-being just a little. Here's the solution.Get an accurate rendering of the square footage of your home. Check county records, take a look at zillow.com, call your favorite Realtor, or get a tape measure and do your thing. Usually you don't include the garage in this calculation. Once you get your square footage, then you need to determine the building cost per square foot in your area for a home like yours. Call a local contractor for a quick estimate or you can call your insurance agent. Average costs in San Diego run about $200 per square foot. With that, a 2000 square foot would take about $400,000 to rebuild. Custom homes can be significantlly more. For a more complete discussion of this, check out: How Much Homeowners Insurance Do You REALLY Need?
Your contents coverage is usually 75% of the amount you have on your home. For example, if you have $400,000 on your home, you'll have an additional $300,000 to cover your personal property (furniture, clothing, dishes, TV, collections, shoes, tools, etc) Usually this is enough, but think through it anyway. If you have antiques, art, collections of any kind then you may need more. Ask your agent for help if you need to.
4. Look at your Personal Liability Coverage. This is the coverage you need when you get sued. Little Johnny runs across your front yard and trips on one of your sprinklers and ruins his chances to become America's Next Top Model and his parents sue your for $250,000. Make sure you don't scrimp here. It's not too expensive to get $500,000 or even $1 Million of liability coverage. If you have $100,000 or less, you could be setting yourself up for a mess just waiting to happen. Put a really big checkbook between your assets and someone who sees an injury as a lifetime paycheck. You might even consider a Liability Umbrella.
5. Check your 'special limits'. This is a REALLY BROAD subject that I just can't do justice to here in this post. Simply stated, there's limits on many things such as cash, computers, cameras, jewelry, furs, goldware, silverware, tools, etc. Call your company and ask for a review. You can increase many of these limits for just a few dollars a year. Sometimes the available increase isn't enough. That's the perfect time to consider a Personal Articles Floater (or it's called many different names) It's a policy that's designed to place stated amounts of coverage on many items from jewelry, business tools, iPods, hearing aids, cameras, musical instruments and on and on. If you have more than 'the average Joe' of ANYTHING, then check this out FOR SURE!
6. Check your deductible! This can be a tremendous cost-control tool in your insurance spending. Simply stated: The larger your deductible, the greater your savings. Usually you can save close to $100 per year just by going from a $500 deductible to $1000. Pick the largest number you can stand without losing sleep at night and ask your agent or company the savings you'd realize by changing. If you have a $250 or smaller deductible, it's definitely time to change it UP! Keep in mind that you usually hit a point of 'diminishing returns' once you get to $4000 or more. This means that you'll save less and less for each additional $1000 you choose. It might make sense to go from $1000 to $2000 if you save $85 a year by doing so, but not from $5000 to $6000 if you only save another $21 by making that jump.
Monitoring your insurance costs and coverages can result in a lot of savings AND peace of mind. Be sure you keep notes and file your thoughts and changes from year to year. These recoreds will make your annual call quicker and easier each year.
Feel free to contact me anytime if you have questions.
Till next time...
It's a Good Life !
Dennis Volz Insurance Agency
10791 Jamacha Bl, Suite 1, Spring Valley, CA 91978
OFFICE: (619) 670-1000 - FAX: (619) 670-1121
eMail:Dennis@DennisVolzInsurance.com
Websites: Company Site: DennisVolzInsurance.com
Friday, September 25, 2009
If I had to Choose Between Current US System and Current Japanese System...I Would Unequivocally Choose the Japanese System
"I�ve been living in Japan for over four years now and my experiences with the Japanese health care system have been universally positive. During my first year in Japan I was covered by the Kokumin-Kenk?-Hoken ?????? (national health insurance � i.e. �the public option�).
Since I had no registered income in Japan for the year prior to signing up with the national health insurance system I ended up paying the absolute minimum amount (the amount you pay into the national system is calculated as a percentage of your previous year�s income). I ended up paying 18,000 yen for a year�s worth of insurance, or the equivalent of around 180 U.S. dollars. This allowed me to see any doctor I chose with no limitation on consultations or on treatment. Of course, there were co-pays involved depending on the services that I needed, but these were so incredibly low as to be practically non-existent. For example, a consultation with a doctor would run me between 300 and 700 yen (three to seven U.S. dollars) and a two-week prescription for antibiotics might end up costing about 1,500 yen (about fifteen dollars).
In my second year of living in Japan new rules came into place and I was required to sign up with the insurance program offered by the university that I work for (supplementary insurance is available if you feel that the university insurance is insufficient). Now I pay somewhere between 100 and 300 dollars a month for my health insurance (I�m not sure exactly what the precise amount is since it�s taken out of my paycheck automatically and it doesn�t make enough of a dent in my earnings for me to spend very much time thinking about it).
As with a great many employers in Japan, the university that I work for requires its employees to take an annual medical exam (at no expense to the individual). This exam includes a host of standard tests (urine, blood, etc.), as well as a mandatory chest x-ray for teachers (tuberculosis is a problem in Japan, as is lung cancer). What this means, of course, is that doctors are able to offer preventative medical advice about lifestyle choices based on the readings they get from your annual exams, in addition to the obvious benefit of catching medical problems early enough that they can be dealt with at the stage when treatment is most effective � i.e., before symptoms escalate to the point of an emergency room visit.
Here's a more detailed account dealing with a sinus infection that I had: I came to the hospital with no appointment and was directed to the ear-nose-throat specialists. I did have to wait almost two hours (luckily I brought a book), but I was finally seen by the doctor who checked my sinuses, sent me for an x-ray to confirm that I had a sinus infection, and then prescribed antibiotics for me. The total cost out of my own pocket? About 3,500 yen, or 35 bucks in U.S. currency. I had a followup appointment the next week. I had to wait for about 15 minutes, the doctor asked me how I was doing and checked my sinuses again, saw that the medication was doing the trick, and sent me away. Cost? 300 yen (about three U.S. dollars).
Since I�ve been living in Japan I�ve had nothing but good experiences with the Japanese medical system and even though I have had two waits of longer than an hour, I was still able to see the doctor on the same day without an appointment and get the treatment that I needed. On the days when I had made a prior appointment I was able to see the doctor within 15 minutes of the appointed time (comparable to the States, except for one time in Berkeley when I was left waiting in the examination room for about 45 minutes before the doctor showed up). My visits to the doctor are unconscionably cheap, the doctors are always nice enough (though it�s true they don�t spend a lot of time with pleasantries), and they�ve listened to and addressed my questions. Whenever I�ve had medicine prescribed it�s been cheap and done the trick. When friends from abroad have come to visit they�ve had similar experiences (including being amazed at the incredibly cheap doctor bills). I have had the proverbial three-minute doctor visit (which was indeed a blunt instrument), but it worked �prescription given, problem solved.
Let me be absolutely clear � If I had to choose between spending the rest of my days with the Japanese health care system as it stands now or spending the rest of my days with the U.S. health care system as it stands now, I would unequivocally and without hesitation choose the Japanese system."
Trane DeVore
Kansai, Japan
Since I had no registered income in Japan for the year prior to signing up with the national health insurance system I ended up paying the absolute minimum amount (the amount you pay into the national system is calculated as a percentage of your previous year�s income). I ended up paying 18,000 yen for a year�s worth of insurance, or the equivalent of around 180 U.S. dollars. This allowed me to see any doctor I chose with no limitation on consultations or on treatment. Of course, there were co-pays involved depending on the services that I needed, but these were so incredibly low as to be practically non-existent. For example, a consultation with a doctor would run me between 300 and 700 yen (three to seven U.S. dollars) and a two-week prescription for antibiotics might end up costing about 1,500 yen (about fifteen dollars).
In my second year of living in Japan new rules came into place and I was required to sign up with the insurance program offered by the university that I work for (supplementary insurance is available if you feel that the university insurance is insufficient). Now I pay somewhere between 100 and 300 dollars a month for my health insurance (I�m not sure exactly what the precise amount is since it�s taken out of my paycheck automatically and it doesn�t make enough of a dent in my earnings for me to spend very much time thinking about it).
As with a great many employers in Japan, the university that I work for requires its employees to take an annual medical exam (at no expense to the individual). This exam includes a host of standard tests (urine, blood, etc.), as well as a mandatory chest x-ray for teachers (tuberculosis is a problem in Japan, as is lung cancer). What this means, of course, is that doctors are able to offer preventative medical advice about lifestyle choices based on the readings they get from your annual exams, in addition to the obvious benefit of catching medical problems early enough that they can be dealt with at the stage when treatment is most effective � i.e., before symptoms escalate to the point of an emergency room visit.
Here's a more detailed account dealing with a sinus infection that I had: I came to the hospital with no appointment and was directed to the ear-nose-throat specialists. I did have to wait almost two hours (luckily I brought a book), but I was finally seen by the doctor who checked my sinuses, sent me for an x-ray to confirm that I had a sinus infection, and then prescribed antibiotics for me. The total cost out of my own pocket? About 3,500 yen, or 35 bucks in U.S. currency. I had a followup appointment the next week. I had to wait for about 15 minutes, the doctor asked me how I was doing and checked my sinuses again, saw that the medication was doing the trick, and sent me away. Cost? 300 yen (about three U.S. dollars).
Since I�ve been living in Japan I�ve had nothing but good experiences with the Japanese medical system and even though I have had two waits of longer than an hour, I was still able to see the doctor on the same day without an appointment and get the treatment that I needed. On the days when I had made a prior appointment I was able to see the doctor within 15 minutes of the appointed time (comparable to the States, except for one time in Berkeley when I was left waiting in the examination room for about 45 minutes before the doctor showed up). My visits to the doctor are unconscionably cheap, the doctors are always nice enough (though it�s true they don�t spend a lot of time with pleasantries), and they�ve listened to and addressed my questions. Whenever I�ve had medicine prescribed it�s been cheap and done the trick. When friends from abroad have come to visit they�ve had similar experiences (including being amazed at the incredibly cheap doctor bills). I have had the proverbial three-minute doctor visit (which was indeed a blunt instrument), but it worked �prescription given, problem solved.
Let me be absolutely clear � If I had to choose between spending the rest of my days with the Japanese health care system as it stands now or spending the rest of my days with the U.S. health care system as it stands now, I would unequivocally and without hesitation choose the Japanese system."
Trane DeVore
Kansai, Japan
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