Random Thoughts Column

Monday, September 27, 2010
A few short posts about life as I know it.

Sprinkling a Little Holy Water

Boundaries. I noted a few weeks ago in my other blog, Again? Really?, that neither Reverend Kenneth Chaulker nor I should comment on the Catholic Church’s ongoing problems. I was reacting to his letter in the Plain Dealer. My suggestion was to leave the discussion of Catholicism to Catholics. Last Friday’s Plain Dealer gave us an opinion column from Sister Simone Campbell, the executive director of a Catholic social justice lobbying group based in Washington, D.C. If I compare her level of understanding of the real world issues involved in the health insurance debate, I am now qualified to lead Mass.

Just as I might be able to mouth the words in Latin, Sister Simone Campbell provided us, the readers, with another copy of the talking points from the Democratic Party’s campaign. About a third of the essay is a defense of the politicians who voted for the bill and an attack against those of us who have yet to be converted.

There are real discussions taking place around this country among business owners who will be forced to pay higher premiums, taxpayers asked to subsidize unfunded mandates, and legislators challenged to justify their decisions. Sister Campbell, like me in a church, is just another kibitzer.

Addicted? We’ve Got a Cure!

A series of emails arrived last week to alert me about an issue that could affect my clients. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) applies to group insurance plans covering 50 or more employees. The law went into effect last October. The rules were issued three months later in January 2010. I printed the key email, a white paper from Milliman, the independent actuarial and consulting firm, and noticed an important sentence at the bottom of the page:

This document was sponsored and commissioned by Pfizer, Inc.

Pfizer? The name of the paper: The Mental Health Parity and Addiction Equity Act: Key Elements and Implications for Smoking Cessation.

Plan sponsors and their service providers and advisors need to be diligent when identifying insured benefits to be compliant with MHPAEA. For instance, it is easy to overlook smoking cessation benefits: they are covered by the act because they are a treatment for nicotine addiction, a substance use disorder.


Now it makes sense. Smoking isn’t a bad habit. It is a sickness. And we’ve got prescriptions for that. Guess who makes them?


The Good News – You’re Living Longer
The Bad News – That’s Gonna Cost You


John Hancock, a leader in Long Term Care Insurance (LTCi), recently announced a price increase. A careful study of all of their long term care claims (both group and individual) of the last twenty years forced them to make this decision.

Morbidity is up. Mortality is down.

Long Term Care Insurance pays when the insured is unable to perform two out of six of the Activities of Daily Living – bathing, dressing, using the toilet, transferring (to and from bed or chair), caring for incontinence, and eating. Hancock has seen an increase in claims and the claims are lasting longer. People are living longer after they begin to receive benefits. More people are living to an age where claims are almost inevitable.

The higher than anticipated utilization proves the need for the product. It also forced the reevaluation of the premium. John Hancock has been selling LTCi for less than thirty years, but has already paid out more than $3 billion in claims.

Why should you care? Because, insurance isn’t as easy as it looks. For every profitable line, there are types of coverages with very thin margins. And we want our insurers to be here, solvent, when we need them to write that check to us or our family. The insurers must maintain secure reserves. Their books have to balance. Their numbers have to be real.

All of the wishing and praying in the world can’t change the nature of basic mathematics.

DAVE

www.bogartcunix.com

By the way, I know that Mass is now done in English, but just as I prefer Hebrew in the synagogue, if I was going to celebrate Mass, I would go for the Latin.