Best Policy Health

Blue Cross drops its zero cost Med. Advantage most places

David Unterman — Mon, 19 Sep 2011 15:10:40 +0000

Freedom Blue, with zero cost in almost all of Calif., WAS a nice program. Many people heard the overview and said “it’s too good to be true–what’s the catch?” The catch is, it’s finished. Unsustainable–apparently. Out-competed by AARP / United Health Care / Secure Horizons–another part of the equation.
Customers are just starting to get mysterious letters from the company about changes coming up, and that Anthem-Blue Cross has alternatives for them. Maybe in a few urban counties, there will be a good alternative from Anthem, but for my people in rural areas, no luck there.
And in a few counties, like Sacramento, Placer, and Yolo, it turns out that for 2012, AARP / UHC has a similar plan with zero premium. I doubt it would have been developed if not for Blue Cross setting the pace with zero premium. With AARP / UHC’s amazing direct mail marketing program, many customers will jump to UHC.
Other choices range from zero premium for no supplement and hope for the best, to 60 or so per month for a supplement with a deductible–actually a smart choice for many people–up to 140 and up for a good supplement and a drug plan. I will be delivering that cheerful news to my customers over the next few months.

State wins battle with Blue Shield over rate increase

David Unterman — Thu, 17 Mar 2011 17:42:58 +0000

Blue Shield apparently gave up on their fight with Dave Jones and the Calif. Dept. of Insurance, as they dropped their plans to raise individual rates this year. Individual customers will see level rates unless they hit a 5-year birthday or move to a more expensive area. Anthem-Blue Cross, Aetna, and Pacificare haven’t yet responded but I boldly predict that they will follow suit and try to wear “white hats” as good guys.
I’m most confident about Anthem doing this as their rates are already high enough to be slowing new enrollments. Aetna’s individual rates are low enough that a modest increase, maybe as early as June, would still keep them competitive.
The Blue Shield statement includes some “pity-me” language—they lost $27 million on this part of their operation last year, and will lose more in 2011. Seniors, groups, and dental insurance customers must be subsidizing individual health customers at least in part. Blue Shield, as a nonprofit, doesn’t have deep pockets and can’t lose money like this forever.
Then Shield brags about being “part of the solution” for their partnership with Mercy Hospitals to reward effective medical practice and keep costs controlled better.
The SF Chronicle effectively states the basic facts today. You can read Blue Shield’s press release under “News” at the Blue Shield of California website.

Deregulate the whole thing! says my Congressman

David Unterman — Tue, 08 Feb 2011 22:18:08 +0000

This area elected a smart but clueless, experienced right wing career politician, Congressman Tom McClintock. While visiting my town recently, he sounded off on “we need less regulation…let’s sell insurance across state lines to reduce costs.” Here’s the long version of my response. I sent a shorter version to the Grass Valley Union so it would run as a letter to the editor.

I’m glad that our Congressman, Tom McClintock, brought up the subject of cost control in health care when he was here (reported in the Feb. 4 Union), but I am surprised that he proposes looser regulation.
He wants to add insurance companies based and licensed in other states to companies OKd by the state of California. That would give you more choices, but it wouldn’t guarantee your bills get paid. In the mid-1980s, when I was first working as an insurance agent, Great Republic Insurance, from Texas, became available here. It was easy to sell Great Republic—the cost was low, yet it covered office visits and prescriptions more generously than California companies like either Blue Cross or Blue Shield.
Great Republic lasted about a year. Texas never checked Great Republic’s finances. Actually it was just a “Ponzi” scheme that could pay small claims as long as new clients were joining, but failed when big claims arrived.
There is another problem with having lots of little competing insurance companies rather than a few large ones. A company with thousands of customers in our county has the leverage to force doctors and hospitals to cut prices. Even if the customer has to pay part of the bill, his share is based on that lower amount. Some minor insurance company from Iowa or Rhode Island with just 5 or 10 customers here would get stuck paying full price, and so would its customers. Then, as soon as any big claims happen, their rates shoot way up.
Anthem-Blue Cross uses this kind of cost control. Many of us have read an “explanation of benefits” showing that the insurance company paid a medical provider half or two-thirds of what was billed, while also adjusting the patient’s share of costs.
Regulation by 50 states has been great for the companies, but lousy for consumers. The surgeon and medical cost researcher Atul Gawande points out (New Yorker magazine, April 3, 2010) that, “in 1965, health care consumed just six per cent of U.S. economic output; today, the figure is eighteen per cent. Nearly all the gains that wage earners made over the past three decades have gone to paying for health care.”
Meanwhile, though other countries see people’s health improving, the USA has dropped to 37th among 191 countries in objective measurements like the death rate for men between 15 and 60, and the death rate during childbirth, although we spend the most (New England Journal of Medicine, Jan. 6, 2010).
Dr. Gawande agrees that the national health care reform bill isn’t perfect, and finds that it’s not just a big-government approach. Rather, “In large part, it entrusts the task of devising cost-saving health-care innovation to communities like Boise and Boston and Buffalo, rather than to the drug and device companies and the public and private insurers that have failed to do so.”
The new law also makes insurance companies pay out medical benefits totaling 80% of what they take in (maybe 85% eventually). To achieve this, all the companies have cut payments to me and other local agents by half. I realize steps like this are needed, while McClintock opposes them as being too much regulation.
Back in 2008, he blamed the banking crisis on too much regulation, which surprised me. “Free the financial institutions from burdensome regulation”, is what I remember him saying at the Veterans Building. Just let bankers and investment companies do whatever they want? Doesn’t sound smart to me.
Mr. McClintock often speaks about protecting entrepreneurs from burdensome regulation, as if he is an ally of the small business owner. But entrepreneurs like SPD Market and DeMartini’s Pharmacy are worlds different from huge stock corporations like Chase Bank, Aetna, and Wellpoint which employ armies of lawyers and financial wizards. Lumping them all together confuses matters. If our Congressman were really are on the side of everyday Nevada County folks trying to pay our bills, he would use government to help us steer those big outfits, rather than sending us out into an unregulated Wild West.

Aetna the new choice for price

David Unterman — Tue, 04 Jan 2011 19:23:04 +0000

over age 50, anyway, here in the foothills. 50 to 100 less monthly than Blue Shield and Blue Cross.
At younger ages, Blue Cross’ Tonik and Blue Shield’s HSA plans are still competitive but not as you get older.
In my main County, Nevada County (Calif.) their doctor network is a bit weak but still about adequate.
I have the doctor lists, both specialists and family doctors, available as pdfs if anybody needs them.

California insurance companies join together, squeeze agents to cut overhead

David Unterman — Wed, 15 Dec 2010 16:13:33 +0000

Conspiracy? Price fixing cartel? Tweedledum, tweedledee, tweedledoo? You decide.
Wed., Dec. 8—Aetna emails its agents who sell individual health insurance, detailing a complicated set of tiers that will cut agent’s commissions to about 4% of gross premium at first, then declining as clients get older.
Thurs. Dec. 9—Blue Shield posts a byzantine apology—not summed up in any email, rather you have to navigate several big documents to find it–for dropping agents to about 5% of the gross.
Also December 9—Blue Cross is straightforward as it tells us we will get a flat 5% of the initial premium. No increase as customers get older. The latter 2 companies continue to pay roughly double for the first year. All three are a cut of 50% or more from the habitual 10% of premium for folks paying the published price.
The timing is revealing. None of these companies had the guts to make this unavoidable move by itself. There were murky hints last summer. Do these three actually compete? With such agreement in the timing and the terms, it doesn’t look that way. Aetna will fall in favor among those agents who heavily weigh their own bottom line, and Aetna must know this, so my respect for them goes up a little. But I worry about their long term viability if their market share falls too much.
Many of us agents were expecting a change like this. It’s one easy and essential step for keeping administrative and marketing costs under 15%. Or at least appearing to have a plan for reaching that. The level of marketing right above us, the regional representatives, was cut back by varying amounts. Blue Shield used to have about a dozen covering the state and buying us lunch frequently while keeping our knowledge base fairly current. Now there are 2 virtual people who don’t travel at all. Blue Cross has cut the number of reps, who now hold mostly big group events.
The fourth significant company, Kaiser, depends less on outside agents. I’d welcome hearing from anyone who knows their commission and financial situation. Healthnet is in disarray.
My advice to folks who have to buy individual health insurance is mostly to ask more questions and take careful notes. Find plan summaries that you can understand, or slog through the 90-page official versions. As your agents get reduced access to company insiders who know the plans’ details, they may need more time to get answers for you. I wouldn’t assume that the bigger agencies can watch out for you better and judge the policies objectively. The insurance companies have more types of leverage—bonuses mostly–to push those agencies around. We smaller agents gave up on those long ago. And with bigger agencies, your main point of contact may be customer service staff with less training and experience.
Finally, you can say I’m whining but that’s not my intent. I’ve been saying for years that agents are overpaid, and that I would work the same if paid at these new rates. I want my customers to keep their insurance a long time, in a stable and fair market, and lower commissions promote that. Other agents dismissed such radical talk before.

After 9 months, Blue Cross of CA is cleared to write new individual health insurance

David Unterman — Sat, 11 Dec 2010 14:29:40 +0000

Hottest news is that Blue Cross is back in the individual health insurance market after 9 months of fighting with California regulators. This is good for all individual insurance customers, because without Blue Cross and their aggressive pricing, there just isn’t enough competition. Blue Shield in recent months has gotten overly snooty about who they would let in their exclusive club of insured folks.
Folks in urban areas at least have Kaiser in the mix. Out here in the foothills, Aetna and Blue Shield were the only 2 “fighting” for customers. Aetna, to their credit, has been charging reasonable prices even with minor health issues, so they have some competitve spirit.
Several of my customers have pre existing health issues, and I will send some of these to Blue Cross to assess their aggressiveness after this slow period.
I have had a quick look at prices, and the Tonik plan is again a decent choice for people in their 30s and 40s. More details on plans and prices soon.

State fines insurers–chump change, or start of a trend?

David Unterman — Tue, 30 Nov 2010 17:40:30 +0000

California insurance regulators apparently reached a “plea bargain” over rejected claims from health insurance companies, with fines of up to $900,000 and more restitution to come. The companies did not publicly criticize the fines, so they must think the amounts and the process are OK. Here’s LA Times’ report’s take on it.

The relative sizes of the fines surprised me, with Blue Shield and Blue Cross tied for the lead with 900K each, just ahead of United/Pacifare at 800K, and both Kaiser and HealthNet at 750K, despite Blue Cross being twice as big as some of the others.

After an 18-month audit, the amounts are probably not random, so my guess is that Blue Cross does better than the others at honoring claims fairly. The higher-than-expected fine for Blue Shield matches what I’m hearing from my foothills customers: that Blue Shield used to pay claims quicker, but has become more likely to delay and deny payment for no good reason.