Keeping Up With Wendell Potter's Bulletins From the Front

by LAS

Please see the latest column from Wendell Potter, the insurance industry whistle-blower, on the pages of PR Watch, a watchdog and consumer service at PR Watch dot org. Potter discusses what provisions of the new healthcare reform bill are worrying insurance industry execs and why, and how they hope to pull the teeth from the new law. Take for example the Medical Loss Ratio (aka MLR).

To quote Mr. Potter: The insurance industry tried unsuccessfully to strip the minimum medical-loss ratio provision from the bill. It wanted to have the freedom to keep spending less and less on medical care because every dollar not paid out in claims is a dollar that can be used instead to increase profits and to pay CEOs millions of dollars every year. Having lost the battle on Capitol Hill, the insurers are now turning their attention to the NAIC, which Congress gave the responsibility of determining the nitty-gritty details of how insurers will have to comply with the law.

Rest assured that the insurers will be pulling out all the stops to persuade the insurance commissioners to make it easy for them to meet the requirements of the new law by manipulating the definition of medical care. One of the things insurers will try to do, for example, is to get the NAIC to let them shift a lot of what insurers now count as administrative expenses into their medical expense category. If that happens, the insurers will look like they're suddenly spending more on medical care without changing anything at all.

The devil is ever in the details. And if you let the devil define all the terms of the law's provisions, then the industry will have gutted the law without seeming to have lifted a finger to do so.

So keep an eye peeled for shifty little maneuvers like this. And more power to Mr. Potter. Read the last column of his at http://www.prwatch.org/node/8977.

Remember the Part in 'Sicko' When Sick People Had Policies Canceled Back to Starting Point?

by LAS

The Michael Moore film Sicko threw light on many kinds of problems that ordinary people have with their health insurers. One such problem is rescission, where a company decides that it issued a policy in error (often claiming the policyholder lied or omitted required information on the application), and cancels that policy all the way back to its starting date.

This sticks the hapless policyholder with all the bills that the insurer had paid while the policy was in force. Sicko related the story of one such victim of the rescission power, who had omitted a history of yeast infection and was stuck with a $7000 surgery bill for an unrelated illness. NAIC, the regulating body for the insurance industry, has decided to take steps to curb abuse of rescission and bolster consumer protection.

NAIC sent a letter to the House Energy and Commerce Subcommittee on Oversight and Investigation. In this letter, NAIC outlined its plan to analyze rescission-related consumer complaints, and develop procedures for external reviews of these rescissions. It stated that it is determined to prevent abuses of the rescission authority, which is used by insurers to cancel policies that it decides were issued in error.

It is nice to see that Moore's film has prodded NAIC to at least examine the practice of rescission and promise to improve consumer protection. We will see what comes of this, or whether the industry will pull the teeth out of any attempts to regulate itself.

What features should you look for in a Long-Term Care insurance policy?

You have finally decided to bite the bullet and check around for a long-term care policy for yourself or a loved one. But where do you begin? What features should be included in a plan?

You do not have to re-invent the wheel when seeking a LTC policy. The folks at the National Association of Insurance Commissioners (NAIC, found online at NAIC.org) have kindly provided a mini checklist for your benefit. The list includes:

• 
  At least one year of nursing home or custodial care, and should also include intermediate care.
  You probably want home health care included, too. Home health should not be limited to skilled care (meaning a registered nurse). You will probably need to call in unskilled help to assist with household chores, to help bathe and feed your loved one, or any of the myriad things that need to be done.
• 
  Coverage for Alzheimer's disease, if the policyholder develops the illness after the policy is issued.
• 
  Inflation protection option. No one knows just how expensive it will be ten years from now to keep someone in a decent nursing home; prices have risen sharply over the past ten years for all health care. It will cost you more to have this rider or option.
  The insurance carrier is obligated to provide you with a free copy of the “long-term care insurance shopper's guide”. They prefer to hand this out after you have signed on the dotted line for an application, but you are NOT obligated to buy or express an interest in buying, in order to get this booklet.
• 
  A guarantee that the policy cannot be canceled, nonrenewed, or otherwise terminated because you get older or develop a chronic illness/serious disease.
• 
  You have the right to a 30-day period – known as a 'free look' – in which to examine the policy and return it if it does not seem to be what you wanted. The insurer will return your check. This is a standard provision, not a gift from each insurer, but do mention it anyway.
• 
  There should not be any requirement such as the following: that the policyholder first be hospitalized before admission to a nursing home in order to be covered; that the policyholder first receive skilled nursing home care before entering an intermediate or custodial nursing home; or that the policyholder first receive nursing home care before receiving benefits for home health care. Why are these important? Because most people prefer to keep a loved one at home for as long as possible before finally transferring him or her into a nursing home. These provisions we have listed all are intended to keep someone in a healthcare facility of some kind rather than at home.
• 
  In addition, you might see a 'waiver of premium' rider. This allows you to stop paying premiums during the time you are receiving benefits. Read closely to find what restrictions there are on this rider. Commonly, you will have to be in a nursing home for 90 days before the waiver goes into effect.
• 
  Pre-existing conditions. Insurers usually say in the policy that pre-existing conditions are excluded for 6 months or a year. However, often they will simply not write a policy for someone with certain diagnoses. For example, I once tried to get a long-term care policy for a lady who was 72, in great shape – but underwriting turned her down because she had diabetes. Even though her condition was controlled and her weight was in the normal range, they felt her disease was progressing enough so that they did not want the risk. Also, some diseases may be quite common in your state and some insurers will not cover it. In Minnesota, multiple sclerosis is quite common (statistically speaking) and so it is excluded from dread disease policies. (In other words, if you have a family history of this disease, move to another state if you want to buy a dread disease policy.)
• 
  What exclusions are in the policy? It is common that injuries or illnesses that result from self-inflicted causes are excluded. But you may be surprised that those who have a history of drug or alcohol abuse will also be excluded from coverage if their condition is deemed related to that history. (Example: liver disease, brain damage from a drug overdose, etc.)
• 
  Possible return of premium. Some policies allow you to get a healthy refund of premiums paid if you do not use the insurance provisions or decide to cancel. You will not get 100 percent of your premiums back. You will however pay more for this rider. Why would you want this rider? If at some point you can no longer afford the premiums, or some other option opens up for you that will replace the coverages of this policy, you could decide to cash it in, so to speak, and use the cash to buy into another coverage.

People generally buy far too much long-term care insurance. From the statistics that I have seen, most people only spend one, two, or three years in a nursing home. And yet people are terrified of the possible expenses of spending twenty years in such a facility.

Although I personally know of a classmate's father, an Alzheimer's patient, spending six years in a nice facility, he was not the norm. He was a big, strong guy before he came down with the disease, and he died as result of complications of pneumonia.

On the other hand, my own grandmother only spent about six months in a skilled care facility before she died. But you have to play the odds here, the reasonable odds. And most likely, three years of nursing home care is all that one can reasonably be expected to afford premiums for.

My other recommendation, as a past professional in the area of senior products, is that IF you cannot get a long-term care policy due to health history or whatever, then increase your life insurance coverage to the most you can reasonably afford. Most life insurance policies are 1) cheaper than LTC policies, 2) easier to get than a LTC policy, and 3) have acceleration of benefit provisions so that if you are diagnosed with a terminal illness or have to go into a nursing home, you can draw upon the policy limits. At the very least, you can put up the life insurance policy as a form of collateral on the final bill from the nursing home.

SEE ALSO:
America's Health Insurance Plans (AHIP) – online at AHIP.org; they have an office in Washington, DC.
American Health Care Assn. -- 1201 I (as in Illinois) Street NW, Washington, DC 20005, 202-842-4444, or online at ahca.org.
National Assn. Of Insurance Commissioners (NAIC) – 2301 McGee Street, Suite 800, Kansas City, MO 64108, 816-842-3600, or online at NAIC.org.
National Council on the Aging – 300 D Street SW, Suite 801, Washington, DC 20024, 202-479-1200, or online at NCOA.org.
Area Agency on Aging – 1-800-677-1116 to find a local office.

State Insurance Regulators Levy $20 Million Fine Against Insurers

KANSAS CITY, Mo. (July 24, 2008) — State insurance regulators, working together through the National Association of Insurance Commissioners (NAIC), today announced the details of a $20 million regulatory settlement agreement between 29 jurisdictions and HealthMarkets, Inc., and its affiliated companies, MEGA Life and Health Insurance Company, Mid-West National Life Insurance Company and Chesapeake Life Insurance Company.

The regulatory settlement follows a three-year multi-state exam that found multiple problems involving consumer disclosure, oversight and training of agents, claims handling and complaint-handling practices. HealthMarkets faces up to $10 million in additional penalties if it fails to meet performance standards outlined in the settlement.

The multi-state examination was initiated by Washington State Insurance Commissioner Mike Kreidler and Alaska Insurance Director Linda Hall in 2005 and coordinated through the NAIC’s Market Analysis Working Group.

“This is a good multi-state settlement that addresses some serious violations of our consumer protection laws,” said Montana State Auditor John Morrison, who chairs the NAIC Market Regulation and Consumer Affairs Committee. “By coordinating our efforts through the NAIC, we are better able to expedite a collective regulatory response that protects consumers on a nationwide basis.”


According to the terms of the settlement, the companies must implement an outreach program that includes the following:

• Sending a notice to all policyholders with policies issued prior to Aug. 1, 2005that includes a toll-free number, mailing address and e-mail address where policyholders can ask questions about their coverage. The notice also must include a Web site address for each company.


• Ensuring each method of communication is staffed by someone able to provide detailed information about the policyholder’s specific plan.


• Establishing a Web site with a “frequently asked questions” section, general coverage descriptions, a listing of contact information and information on how to appeal a claim or file a grievance.

In addition, the companies must report progress twice a year through Dec. 31, 2009, on performance standards targeted for improvement. Led by Washington, the other states involved in overseeing the insurer’s ongoing activities are Alaska, California and Texas.
There are 13 areas in need of improvement, including:

• Agent training and oversight


• Claims handling


• Identification of company


• Transparency of the companies’ relationship with associations


• Complaints and grievances


• Cancellation, non-renewal and discontinuance notices


• Establishing and maintaining a compliance program

[Check NAIC website for more information or updates as they become available. NAIC stands for National Assn. of Insurance Commissioners. Above is from press release.]

Americans Shave Insurance Bills Just by Shopping Around.

Everyone’s looking to save money somewhere, anywhere now that food and gas prices have cut deep into disposable income. Do you at least compare auto insurance offers at renewal time every year?

Go to NAIC.org (National Organization of Insurance Commissioners) and click on NAIC states to find your state of residence. You can compare rates by matching yourself to a set of profiles; this is very imperfect but it’s a starting point. Other places you can start checking premiums are insweb.com and insurance.com.

I might add that if you belong to any organizations you may be eligible for special plans and rates. Members of AARP always get a competitive rate. Members of trade or fraternal groups almost always get some offers every year for their business. (This is true of life and health insurance also, and even IRA accounts.)

This is not a plug for AAA, but I just want to mention that as a member of AAA I get a discount on insurance, and by combining house and auto insurance I feel I am getting a nice package deal. You may belong to some other group or organization that gives you a similar benefit, and I say you’re very lucky to find deals like that. Go for it.