Possible Public Health insurance Options

Sources: Senators weigh 3 government health plans

By RICARDO ALONSO-ZALDIVAR – 12 hours ago

WASHINGTON (AP) — Senators are considering three different designs for a new government health insurance plan that middle-income Americans could buy into for the first time, congressional officials said Friday. Officials familiar with the proposals said senators plan to debate them in a closed meeting next week. The officials spoke on condition of anonymity because details of the controversial plans have not been released.

Creating a public plan is one of the most contentious ideas in the debate over how to overhaul the nation's health care system to cover the uninsured and try to restrain costs.

President Barack Obama and many Democrats say a government option would serve as a check to keep the private insurance industry honest.

Insurers fear the government would use its power to drive them out of business. And Republicans call a public plan in the legislation a dealbreaker, dashing hopes for bipartisan legislation for overhauling the health insurance system. Employer groups are also opposed.

The three approaches being discussed are:

_Create a plan that resembles Medicare, administered by the Health and Human Services department.

_Adopt a Medicare-like plan, but pick an outside party to run it. That way government officials would not directly control the day-to-day operations.

_Leave it up to individual states to set up a public insurance plan for their residents.

But many key details would still have to be fleshed out.

Among them is whether the public plan would be open to everyone, or be limited to small businesses and individuals purchasing coverage on their own.

Also, would the plan reimburse medical providers at discounted Medicare rates or the higher fees that private insurers pay? And would it be financed by tax dollars, or entirely from premiums?

Senators on the Finance Committee will consider the proposals during a closed-door session scheduled for late next week. Committee leaders want to bring a bill to the Senate floor this summer. It's unclear whether a public plan in any form will emerge from Congress.

Citing surveys that show most seniors are happy with Medicare, Democrats say they believe that a public plan would be a political winner. But Republicans counter that it would be a step toward a government-run system in which medical services sooner or later would be rationed.

The majority of Americans now get health insurance through private insurers, about 170 million people in all. Most of them are enrolled in employer-sponsored plans.

A recent report by the Lewin Group, a numbers-crunching firm that serves government and private clients, found that a new government plan could radically alter that landscape — or maybe not.

It depends on the design.

If the public plan were open to all employers and individuals — and if it paid doctors and hospitals the same as Medicare — it would quickly grow to 131 million members, while enrollment in private insurance plans would plummet, the study found.

By paying Medicare rates the government plan would be able to set premiums well below what private plans charge. Employers and individuals would rush to sign up.

But the results would be far different if the government plan was limited to small employers, individuals and the self-employed.

In that smaller-scale scenario, the public plan would get from 17 million to 43 million members, the study said. It found that a government plan could be effective in reducing number of uninsured.

Lewin is a subsidiary of UnitedHealthcare, the nation's largest health insurer. The consulting firm says it makes its own judgments, however. Its work is used by groups on all sides of the health care debate, including supporters of a public plan.

Copyright © 2009 The Associated Press. All rights reserved.

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Property Premiums increasing?

Allstate Has ‘Work to Do’ at Homeowner Unit, CEO Says (Update1)

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By Erik Holm

May 8 (Bloomberg) -- Allstate Corp., the largest publicly traded U.S. home insurer, may raise prices after a first-quarter underwriting loss on residential coverage.

“We have work to do,” in the unit that protects homes and apartments, Chief Executive Officer Tom Wilson said in a conference call with analysts today. “Our homeowners business is not performing the way we’d like it to be.”

The insurer spent about $1.07 for every dollar it collected in residential premiums for its Allstate-branded home coverage in the first quarter because of an increase in claims costs tied to storms on the East Coast, the company said yesterday.

Wilson is seeking to improve results at Northbrook, Illinois-based Allstate’s home and life businesses and reverse investment losses to match results at the profitable auto insurance operation, which provides about two-thirds of revenue. The auto unit is facing pressure amid the recession as drivers pare back coverage and the firm pays claims for clients involved in accidents with the growing number of uninsured motorists.

“We’re not happy with the performance that we have with the homeowner line,” said George Ruebenson, the president of Allstate’s property and casualty business. “We’re taking a harder look,” he said. “Which, as you could probably read between the lines, means more rates in that line.”

Allstate fell $2.65, or 9.6 percent, to $24.95 at 11:36 a.m. in New York Stock Exchange composite trading. The company has dropped 24 percent this year, compared with the 6.7 percent decline in the 21-stock Standard & Poor’s 500 Insurance Index.

Life Insurance

The insurer yesterday posted its third-straight loss on investment writedowns and declines in private equity and hedge fund holdings. Allstate set aside $224 million at its life insurance unit after stock declines raised the cost of meeting obligations to customers that have been promised minimum returns on retirement products.

First-quarter profit before investment losses was 84 cents a share, missing the $1.25 estimate of 14 analysts surveyed by Bloomberg.

To contact the reporter on this story: Erik Holm in New York at eholm2@bloomberg.net.

Last Updated: May 8, 2009 11:47 EDT

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More people driving uninsured?

Drivers drop insurance

Updated: Tuesday, 05 May 2009, 10:50 AM EDT
Published : Monday, 04 May 2009, 5:48 PM EDT

• Jane Santucci

TERRE HAUTE, Ind (WTHI) - More drivers are letting their car insurance lapse because of the sour economy putting themselves and others at risk. If someone cuts coverage and then can't pay the damages, you are left with a much more costly situation.

One car insurance agent said you should make sure you have extra coverage that compensates you if you are hit by an uninsured motorist.

"I see some of my clients dropping full coverage on some of their vehicles. I see them taking that car of the policy that they don't drive very often to reduce the cost. A lot of people are having hard times," John Heaton with Heaton Insurance said.

Florida Homeowners Insurance on the way up

Homeowner insurance: House OKs plan that would increase almost all rates statewide

By Julie Patel |South Florida Sun-Sentinel

April 25, 2009

The Florida House of Representatives approved legislation Friday that would increase almost all homeowner insurance rates statewide.

The broad bill would, among other things, increase individual Citizens Property Insurance policyholder premiums by up to 20 percent annually. And it would allow private insurers to automatically boost rates by up to 10 percent with minimal state scrutiny. Lawmakers in favor said the measure will reduce Floridians' risk to pay damages if a major hurricane hits the state.

"We are one storm away from bankrupting this whole state," Rep. Alan Hays, R-Umatilla, told lawmakers. All property and automobile insurance policyholders in Florida pay fees to offset deficits in state entities Citizens and Florida Hurricane Catastrophe Fund.

Still, there was some vocal opposition before the House voted 75-33 to pass the bill.

Rep. Mary Brandenburg, D-West Palm Beach, said people are more worried right now about losing their homes to a foreclosure than to a hurricane.

"Passing this bill would be like stomping on Floridians when they're already down," Brandenburg said.

The House legislation is in stark contrast to bills passed in 2007 and 2008 that aimed to hold insurers accountable and reduce property insurance rates after they doubled or tripled in some cases after the 2004 and 2005 hurricanes.

Other provisions included in the House bill would:

Increase rates for the $29 billion catastrophe fund, which sells cheaper backup coverage to insurers andphase out a $12 billion portion of it;

Prohibit state regulators from "interfering with" what insurers spend on advertising costs and insurance agent commissions; and

Impose restrictions on public adjusters hired by policyholders to represent them in a claims dispute.

Rep. Dwayne Taylor, D-Daytona Beach, said it doesn't make sense that the Legislature froze Citizens rates the past three years when the economy appeared healthy. The state-backed insurer is Florida's largest home insurer.

"Now that times are bad, we're going to unfreeze these rates and put that burden on" consumers, Taylor said.

The Senate plans to discuss its version of the bill Monday.

Julie Patel can be reached at 954-356-4667 and jpatel@sunsentinel.com.

House bill

Increases rates for the $29 billion catastrophe fund

Prohibit state regulators from "interfering with" what insurers spend on advertising costs

Imposes restrictions on public adjusters hired by policyholders

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A Quick Guide to Health Insurance Lingo

Policies have been dejargonized over the years, but some health insurance terms still need explaining

By Megan Johnson

Posted April 22, 2009

Health insurance has its own language, as young adults entering the world of healthcare policies will find. You might want to print out these terms and definitions, adapted from a guide published by the federal Agency for Healthcare Research and Quality, to consult when comparing different policies.

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Coinsurance: How much you have to pay for medical care after meeting your deductible (below). A typical health insurance policy or plan will pay 75 or 80 percent of a certain amount. The remainder is your coinsurance.

Copay: A set fee you pay each time you receive medical care—$10 whenever you visit the doctor, for example. Your plan pays the rest.

Deductible: How much you have to pay in a given year before your plan begins covering the cost.

Exclusions: What a health plan or policy will not cover, sometimes called limitations. They must be clearly spelled out in the plan's literature.

Flexible spending arrangements: Accounts set up by employees to tap during the year to pay qualified medical expenses. They reduce taxes

because the funds are subtracted from earnings before they are taxed. Anything left over at the end of the year is forfeited.

Formulary: A list of the medications a policy or health plan will cover entirely or in part.

Health maintenance organization: A form of managed care in which you receive all of your care from participating providers. You usually must obtain a referral from your primary-care physician before you can see a specialist.

Health reimbursement arrangement: Accounts set up by employers to pay employees' medical expenses. Only the employer can contribute to the account.

Health savings account: A special account established by an employer or an individual to save money toward medical expenses. As with flexible spending arrangements, they reduce taxes because the funds are subtracted from earnings before they are taxed. A key difference is that any remaining balance at the end of the year rolls over to the next year.

High-deductible plan: A health plan that provides comprehensive coverage only for costly care such as expensive surgery. It features a high deductible and an annual limit on the total amount paid out by a covered individual or family. Such a plan is usually coupled with a health savings account or a health spending account.

High-risk pool: A state-run program that offers coverage for those who cannot get health insurance from another source because of serious illness.

Individual health insurance: Coverage purchased for an individual, usually directly from an insurance company.

Managed care: Managed-care plans are built around a network of physicians, hospitals, and other participating providers. In some types of plans, covered individuals must see an in-network provider; in other types, covered individuals can go outside of the network, but they will pay a larger share of the cost.

Medicaid: The federal program that provides healthcare coverage for low-income individuals and families. It is administered by the states. Eligibility and other features vary by state.

Medicare: A federal insurance program that provides healthcare coverage to those age 65 and older and those with certain disabilities such as end-stage renal disease.

Network: Physicians, hospitals, and other providers that participate in a healthcare plan.

Open enrollment: A set time of year when you can enroll in health insurance or change from one plan to another, usually toward the end of the year. Marriage, divorce, birth, a spouse's death, and certain other life-changing events may qualify for joining a plan or changing plans outside the open-enrollment window.

Point-of-service plan: A type of managed care in which a primary-care physician coordinates your care. You have more flexibility in choosing specialists and hospitals than you do in an HMO.

Pre-existing condition: An illness like cancer or another serious medical condition, diagnosed before you enroll in a plan or purchase a policy, that could be used as a reason to reject enrollment or to deny coverage for treating the condition or a possibly related problem.

P referred- provider organization: Similar to a point-of-service plan: You can see both participating and nonparticipating providers, but your out-of-pocket expenses will be lower if you see only participating providers.

Premium: The amount you regularly pay to belong to a health plan. If you have employer-sponsored health insurance, your share of premiums usually is deducted from your pay.

Primary-care physician: Usually a family-practice doctor, internist, obstetrician-gynecologist, or pediatrician. This physician is your first point of contact with the healthcare system, particularly in a managed-care plan.

Reasonable and customary charge: The prevailing cost of a medical service in a given geographic area. Most plans will not routinely pay a higher amount.

Waiting period: The length of time before coverage takes effect. The cost of treatment and other medical services during this period is not covered.

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Universal Health Insurance - Opinion

Op-Ed Contributor

The Misguided Quest for Universal Coverage

By RAMESH PONNURU

Published: April 8, 2009

Washington

AMERICA'S dysfunctional health care financing system needs to be reformed. But the goal should not be universal coverage. Reform should simply aim to make health insurance more affordable and portable.

Universal coverage has so dominated the health care discussion that even some Republicans have tried to devise market-friendly ways to achieve it. The case for doing so is presented in practical, moral and political terms.

The practical case is that uninsured people raise premiums for everyone else. But such cost shifting raises premiums by 1.7 percent at most, according to a 2008 study published in the journal Health Affairs. Reforms that increase the number of people with health insurance, while stopping short of universal coverage, would presumably make that small percentage even smaller.

Efforts to eliminate this relatively tiny expense, on the other hand, would surely generate new costs. To mandate that everyone purchase health insurance, as many have suggested, would require that the government specify what constitutes adequate coverage — in other words, what health conditions an insurance policy would need to cover. Every provider group with a lobbyist, from massage therapists to fertility specialists, would want in. The result would be expensive insurance policies and costly government subsidies to help people buy them. Young and healthy people, especially, would be forced to overpay. So we would end up with more cost-shifting, and no savings.

This is another way of saying that universal coverage cannot be achieved using free-market methods — a point that many liberals correctly make. A bipartisan bill in the Senate introduced by Ron Wyden, an Oregon Democrat, purports to use the market to provide universal coverage. It would keep insurance companies in business, but only by converting them into regulated and subsidized public utilities, eliminating most existing insurance plans and expanding the I.R.S. by a quarter. It owes more to Rube Goldberg than Milton Friedman.

The moral case for universal coverage is that we have an obligation to see to it that the poor and the near-poor have access to good health care. But universal coverage is only one way of realizing that goal, and not necessarily the best one. For people with pre-existing health problems, for example, direct subsidies would probably be more efficient than rigging insurance markets to make sure they are covered. As Michael Cannon, a health policy analyst at the Cato Institute, has written, "There is no evidence that a dollar spent on universal coverage will save more lives than a dollar spent on clinics, or reducing medical errors, or nutrition, or fighting poverty, or even improving education." And if universal coverage generally reduces the quality of care or retards medical innovation, it could end up being bad for everyone, including the poor.

The political case for universal coverage is based on the assumption that voters want it. But people's preference for universal coverage is not as great as their desire to reduce health care costs, a Kaiser Family Foundation poll found in late 2007. So it's not clear that people would accept higher taxes, mandates or the prospect of rationing health care one day just to make sure that every individual is covered. During the Democratic presidential primaries, Hillary Clinton repeatedly attacked Barack Obama's health care plan for not covering everyone — and as you may have noticed, he survived. If Democratic primary voters are not wedded to universality, the larger public surely is not.

An alternative approach would be to make it easier for people to buy insurance that isn't tied to their employment. The existing tax break for employer-provided insurance could be replaced with a tax credit that applies to insurance purchased either inside or outside the workplace. At the same time, state mandates that require insurers to cover certain conditions, which make it expensive to offer individual policies, could be removed.

These two reforms would address most people's anxieties about the health care system. Insurance would be more affordable, especially for people who cannot get it through an employer, so the number of people with insurance would rise. Indeed, this would enable more than 20 million more Americans to get insurance, according to a model created by Steve Parente, a health economist at the University of Minnesota.

More important, people would own their insurance policies and thus be able to take them from job to job. They would no longer need to worry about losing their job and their insurance at the same time, or feel they need to stay with a job they dislike because they need the benefits.

Critics of this free-market solution have argued that it would cause the current employer-based health insurance system to unravel. But that system is already unraveling, and if public health plans are created, as called for under President Obama's proposal, they would unravel further as employers dumped their workers onto the public plans. A second argument is that people with pre-existing conditions would find it hard to get coverage. In fact, in the long run, the option to buy renewable policies that people could take from job to job would keep most people from needing to face this problem. Direct government subsidies could help the remainder.

The third complaint against free-market health insurance is that it wouldn't cover absolutely everyone, because it would neither force people to buy insurance nor require the government to provide it. Pharmaceutical companies and other provider groups would make a bit less money than they would if there were universal coverage — although they would probably be better off than they are now.

For most people, though, especially those in the middle class, it would mean paying less for health insurance. Some people, of course, would still choose to go without it. But that would be their call, as it should be in a free country.

Ramesh Ponnuru is a senior editor at National Review.

A version of this article appeared in print on April 9, 2009, on page A27 of the New York edition.

TARP Funds for Life Ins Co’s?

Treasury Weighs Investment in Life Insurers

Department Says Some Firms Are Eligible for TARP Funds

By David S. Hilzenrath and Brady Dennis

Washington Post Staff Writers
Thursday, April 9, 2009; Page A11

The Treasury Department is considering opening another front in the effort to manage the financial crisis, saying that some life insurance companies qualify for a potential investment of taxpayer dollars.

Treasury has determined that a small number of insurers are eligible for funds under the Troubled Assets Relief Program, and it is evaluating their requests on a case-by-case basis using the same criteria it applies to banks.

"These are among the hundreds of financial institutions in the . . . pipeline that will be will be reviewed and funded as appropriate on a rolling basis," Treasury spokesman Andrew Williams said yesterday by e-mail.

Although Congress last year granted the Treasury the authority to buy stakes in life insurers, the department has been slow to do so, partly because the federal government does not regulate life insurance companies and has limited ability to monitor their financial condition. Life insurers are regulated by the states.

To make sure that the federal government had at least a limited window into the affairs of TARP recipients, the Treasury declared last year that insurers would qualify only if they owned banks or thrifts, which would put their holding companies under the purview of Washington regulators such as the Office of Thrift Supervision. To meet that test, some insurers bought thrifts. Still, during the Bush administration, Treasury officials warned that such maneuvers might not be sufficient.

Now, the Treasury Department appears to have gotten past some of the earlier qualms.

"There are a number of life insurers who met the requirements for the Capital Purchase Program because of their thrift or bank holding status and applied within appropriate deadlines," Williams said.

The Wall Street Journal reported yesterday that the Treasury has decided to extend bailout funds to a number of struggling insurers. The Treasury didn't go that far in its public comments yesterday, and industry officials said they were unaware of such a decision.

TARP money could help keep insurance companies out of financial trouble and could enable them to provide greater support for the broader economy.

Insurers help fund American business by plowing money into an array of investments, such as corporate bonds, home mortgages and commercial real estate loans. The recession has eroded the industry's financial strength and left it vulnerable to further deterioration.

The result is that insurers could be forced to raise cash by selling assets at depressed prices and to raise capital at great cost. Making matters worse, as the bonds they hold are downgraded by credit rating agencies, it becomes harder for them to maintain the financial cushions regulators require to safeguard policyholders.

Taking capital from the government could ease the pressure, but it could also dilute the value of current shareholders' stock and subject the insurers to government restraints.

State regulators have tried to give relief to many insurance companies in recent months by changing how they measure capital and reserves. Instead of giving companies more capital, the state actions give insurers the appearance of more capital.

The Obama administration has proposed creating a federal regulator that would oversee institutions that have the ability to threaten the financial system, including insurers. The Treasury appears willing to give the insurers money even without that backstop in place.

"I surely hope they have the ability to see what they're getting into," said Peter Larson, an analyst at Gradient Analytics, adding that the capital needs of some insurance companies may be greater than meets the eye.

For insights into the financial condition of insurers seeking TARP funds, the Treasury has been talking to state regulators, said Therese M. Vaughan, chief executive of the National Association of Insurance Commissioners.

Vaughan predicted an increase in insurance company failures, but she said she doesn't expect any major insurers to fail and she doesn't expect widespread failures. She predicted that an industry safety net would be capable of handling any insolvencies that arise.