Confessions of a Health Insurance Agent – Part 2

The Grass is Greener on the Other Side of The Fence – The Age of the Golden Goose

In the early 1980’s, group health insurance rates began to skyrocket. Medicare and Medicaid, signed into law by President Johnson in 1964, was beginning to have an unintended financial impact on the health care delivery system. Cost shifting to private pay plans began, health insurance rates began to climb. to new highs.  Insurance companies embraced a new concept called “Managed Care”. PPO’s and HMO’s fought for market share.

As medical insurace premiums rose, insurance companies realized tremendous and lucrative cash flow opportunities. If an insurance company could make 2% on the float, it would mean millions, if not billions of dollars in profits. More insurance companies entered the health insurance market. Prudential and Aetna for example, redirected their profits by entering, for the first time, the health insurance market. And, more insurance agents, especially property & casualty agents, joined in the feeding frenzy seeking 15% commission on health insurance sales.

There was never a better time to become an independent health insurance broker. The sky was the limit, the market wildly free and unfettered, with unbelievable financial rewards for those that worked hard and long hours, day after day. Competition amongst insurance brokers was intense and fratricidal. Greed became a driving factor and honorable business ethics became uncommon.

After nine years working for a health insurance company, I stepped out into the brokerage world seeking my fortune. It would be an interesting learning experience, frought with dangers and rewards. I was entering  unchartered waters, complicated by the good old boy system of alliances and unspoken codes of  questionable ethics of underground operatives on the dole.  I was about to make more money per year than I ever dreamed of making. Although I was “just an insurance agent”, I was to make more money than the owners of the companies I help to insure. 

But, I was about to be hit with a seemingly unsurmountable roadblock.

Editor’s Note: This article was written by Molly Mulebrier of Dime Box, Texas. This is a fictional account of the experience of a health insurance agent.

Physician Owned Hospital Outraged – Hussein In Trouble in Deep South Texas

“Money will buy anything” is the mantra of key political contributers in deep South Texas. And so it seems. “Hussein threw McAllen under the bus” has exaserbated local politics – will the defunct and nearly extinct Republican party of deep South Texas seize the initiative and make new polical allies with rich physicians and their political hacks?  Read all about it here –

Texas Doctor Publishes Price List – Does Not Accept Insurance, Medicaid or Medicare

Office Visit for a total of $35 – heck of a deal when we are seeing office visits costing anywhere from $65-$190 through insurance programs. Dr. Posada publishes his prices and takes cash or credit card only. He does not accept insurance, nor Medicaid or Medicare. Cash only please! affordable-clinics.

If Brownsville Independent School District, Cameron County and the City of Brownsville would bid out for physician services rather than rely on boggus savings touted through PPO networks, the taxpayers would save millions of dollars a year.

Confessions of a Health Insurance Agent – Part One Continued

In the late 1970’s, the company I worked for experienced an internal political shift in power. Politics are found in all organizations it seems. A new President was selected by the Board, and heads began to roll shortly thereafter. “New Blood” was needed in management, a new direction was charted and the ambitious new President had high expectations of increased market share.

The old and balding Senior Vice President of Sales was sacked. A new, young ex-car salesman from East Texas was selected to lead and command the troops towards a rolling conquest of the state, the goal of which was to increase market share from 23% to 25% within the year.

How to accomplish this? Easy, pay the sales force huge sales bonus based on net-gain in each territory, and “buy business.” That is when I realized I was sitting on a gold mine. I read the new sales incentive bonus program and realized right away that I did not have to even write a new group to get the bonuses; all I had to do was gerrymander my existing book of business. But, what really made my day was the new business rates we were getting from underwriting. We were buying business, no one could compete with our rates. We were giving the insurance away for pennies on the dollar. I became an order taker, a well paid order taker. My income rose to over six figures, and I was “made.” Customers were happy too, at least in the onset.

Eventually this strategy could not sustain itself and all hell broke loose. Member hospitals, all on an annuity contract with my company, began having cash flow problems due to slow (and incorrect) claim payment. Members were having difficulty getting their claims paid. No one was happy, and those of us in the sales division took the brunt of our customers anger every day. Instead of devoting time to selling new business, I was spending all my time as a roving customer service rep. Competition woke up and began making significant in-roads in the market. It was not fun.

Management decided that the sales force was paid too much money and the compensation formula was changed. A quick study showed that my six figure income would now drop down to where I was in the early 70’s. My customers were not happy, I was not happy.  It was time to move on.

Editor’s Note: This is a fictional character and is not intended to represent any one individual.

Drug Gangs Build Clinics – Will Hussein Lend Support?

There is always a silver lining it seems. Perhaps the illegal drug trade is a good thing? A quick check at the Cameron County, Texas website under prison population, you can view pictures and the status of all 900+ inmates. Over 95% of the inmates are in for drug related offenses. With that many “druggies”, it would seem Cameron County could benefit from drug traffickers Robin Hood approach to neighborhood health care.


Pet Health Insurance – Is It Safe From Government Interference?

 Bruno, 1924-1938

Pet health insurance, thus far, has escaped the scrutiny of Washington’s Communist Cadres. There is no Pet Health Insurance Czar yet, not even a hint that one will be appointed anytime soon. So, what’s up with that?

Any history buff will tell you that the first pet insurance policy was written for a dog in Sweden in 1924. His name was Bruno. And in 1947 the first pet health policy was written in Britain with sales taking off rapidly. Today the UK has the most mature pet insurance market in the world, with over 18% of pets insured. Yet Jolly Old England has not extended their government safety net to man’s best friend. This is an obamanation indeed. Are not all of England’s four legged creatures entitled to health care?

And what about the USA? The first pet insurance policy sold in this country was to cover TV’s heroic dog Lassie. The underwriter, of course, was Lloyds of London of Great Britain. Today, pet health insurance in the United States is becoming popular with dog and cat lovers of all socio-economic levels.

Pet health insurance is a bargain these days. Premiums as low as $10 per month. And, you can take your animal to any licensed vet – PPO’s have not entered the scene yet. Group policies are available too. But, many Americans simply cannot afford coverage even at these rates. Yet, all American pets are entitled to health care, are they not?  We need and must demand that the federal government at least mandate better benefits, or implement a national pet health insurance plan at best. Animals have rights too!

And what about food insurance? When are we going to get that? We are all entitled to food, aren’t we?

Welcome To Mexico, Gringos

Repealing the laws of supply and demand? – This article is “right on.” We have been predicting this for the past six months and have even started a medical tourism company to assist our clients in seeking affordable and easy access medical care in expectation of when the communists (democrats) expand our national welfare state to include “free” medical care for all.

Confessions of a Health Insurance Agent – Part One

Editor’s Note: This is from Molly Mulebrier, Phd, CPA, CLU, Jd., of Dime Box, Texas, contributing editor for this Weblog. This is based on a fictional character and is the first of a four part series.

As I approach retirement, after being in the insurance industry since 1973, primarily in health insurance for employer groups, I believe it is time to come clean with the employers whom I have scammed all these years.  These confessions will surely pave the way for my safe passage through the pearly gates in lieu of the pergatory existance I truly deserve. Thank The Lord for the Forgiveness Doctrine which the Catholic church perfected many years ago.

It has been a fun ride with tremendous financial rewards. It has made me a millionaire several times over. And, I dont even have a college degree. A remarkable achievement it seems. But, it was only through deception, lying and cheating that I have been able to gain unreported riches at the expense of my clients. Bernie Madoff could have learned a lot from me.  He is in prison, I am not.


My first job in the insurance industry was with a national health insurance company. I was a sales representative for them. I was assigned  a territory that included a substantial book of business which I quickly learned I could prey upon with abandon.  It was like being given a cookie jar with no adults in the room! With management’s active guidance and on-going and knowing approval, I became a sales star.

I quickly learned that when a renewal hit my desk, I could “override” the underwriter to my advantage. For example, if the renewal was for a political subdivision, I knew that any rate increase would trigger a Request for Bids scenario and my renewal would be known to all who attempted to bid and undercut my renewal. So, instead of the underwriter’s 15% renewal increase, I magically changed the renewal to a 32% increase, officially typed on a company letterhead. I was now in a win, win situation. I could not lose. My competition would come in 5% lower than my renewal, thinking they had a great bid. I would come in with a 23% increase and still have 8% in my pocket should negotiations with the employer become necessary. If I sold a higher rate increase than what the underwriter wanted, I became a darling of the underwriting department and future favors would come my way.  And, if I really wanted to make myself look good to management, and put more bonus money in my pocket at the same time, I would advise the group “Look, my renewal came in at 32% but I got it down to 23% . At this point, there is not much more I can do here. But, if you were to buy a $10,000 term life policy on each employee, I can drop the renewal increase down to 19% with the difference going to pay for the group term life plan. So, you are getting a “free” group life plan for all your employees”. And, I would add “we can do this since term life is a very profitable product line and we use those profits to offset health losses within our group health business portfolio.”

I first did this on a very large public school district. Not only did I pocket about $4,000 in bonus money, I won a trip to Las Vegas too! I was living the high life, earning over $50,000 per year on average in the early 1970’s. Better things were yet to come.

Is Your Consultant Unbiased?

Money drives behaviour – wall-street-journal-insurance-consultants, wall-street-journal-revenue-streams

This White Paper is an excellent piece that all employers should read. It details the truth behind undisclosed consultant/agent/broker revenue streams.

unbiased-consultants – A MUST READ

This was written by Molly Mulebrier, Jd., Phd., CPA, CLU, of Dime Box, Texas. Her articles have appeared in Forbes, The Wall Street Journal, and the Austin Stateman. She has agreed to be a contributing editor of this weblog.

Health Care Bill Passes Committee

A 1,000 + page Health Care Bill passed committee this week. Here is a 4 page summary of the bill –

Our office is in the process of reading the entire Bill. So far, it is much worse than what you see in the four page summary above. (The 4 page summary was put out by the government with a positive spin attached).

This Bill represents the biggest government power grab in the history of our country. And, once implemented, no one will like it, including those currently un-insured.

Below is a schematic of the Bill – this is not a joke:


2009 Medicare Fee Schedule Released

To review the 2009 Medical Fee Schedule, go to

Editor’s Note: Could this be the new fee schedule for our upcoming national health care plan? Since we now have two national health care plans, Medicaid and Medicare, would the new universal health care plan reimbursement rates be 1). Medicaid based, 2). Medicare based or 3). Hussein based? Or would existing PPO’s continue to play a role in our health care system? We suspect the correct answer is #3.

PCP Visit – Cash Only

This picture was taken this morning on the way to Starbucks in Brownsville. The location is on the frontage road of Highway 77. According to the sign in the window, total charge for an office visit is $35 – cash or credit card only. No appointment necessary.

So the question is, if I have an insurance policy with a $20 office visit co-pay, do I go to this clinic and pay $35 or go to a PPO doctor down the street and only pay $20?  What is interesting is that the PPO network fee is probably a multiplier of 2008 RBRVS (Medicare), say 100% of Medicare for example. In that case, the PPO doctor down the street gets paid $80-$145 for the office visit, which the employer’s health plan pays for. This makes no economic sense at all – pay $35 cash or as much as $145 or 400% more  with insurance – for an office visit?

Plantiffs Claim Hidden Fees in Car Purchases

This is an excerpt that appeared in today’s issue of the Brownsville Herald:

A lawsuit has been filed against Cardenas Motors Inc., a Rio Grande Valley auto dealer, seeking to collect damages because of “misleading or deceptive acts or practices,” court documents say.

The lawsuit was filed Wednesday by The Zavaletta Law Firm, which is representing eight individuals who bought nine used automobiles from the Cardenas location in Brownsville and claim they where charged an unknown fee for services they didn’t receive.

The case was filed in Brownsville’s Cameron County Court-at-Law No. 3, with Judge Menton Murray Jr. presiding.

The fee in question is listed in the motor vehicles buyer’s order as “VIN REG” and it ranges from $392.18 to $798.18, said attorney Peter Zavaletta.

Editor’s Note: This is exactly what is happening in the group health insurance business, in our opinion. Hidden fees, or fees disclosed that offer nothing in return. Consumers should be incensed.

TPA Maximizes Revenue Stream

A Texas based TPA has fine tuned the art of maximizing lucrative revenue streams on unwitting employers. They employ a strategy of disclosing low administrative fees to gain the business, while hidding other fixed costs on the claim side of the ledger. Their contract includes a claim transaction fee on top of a pepm administrative fee, which is highly uncommon in the industry. Claims are unbundled as much as four fold and the claim transaction fee is applied to each. An “aggregate expense factor” is billed by inflating the aggregate factor in their proposal, then upon the sale they lower the agg. factor by as much as $12.50 and call that an “aggregate expense factor.”  When you add up all the fees, this TPA earns as much as $50 pepm and as much as $90 for each family unit per month. This, compared with the usual $15-$25 typical TPA fee, is outrageous.

The PBM contract is between the TPA only, with spread-pricing  which drives the group’s Rx costs up by as much as 62% (we documented this on one case).  Duplicate claim processing is charged at $25 per claim, in addition to the other fixed costs within their contract. And finally, upon renewal, the TPA presents a new administrative contract with a TPA name almost exactly the same but it is actually a different Texas corporation. The new contract states that they are not liable for anything the prior TPA may have done wrong.

This TPA preys on political subdivisions. They have brought the art of politics to a new level within the insurance industry.

PPO Fights Back Against Cost Plus Scheme

A well known PPO network, concerned about their relationship with network hospitals, has decided to boycott any group that implements a cost-plus hospital reimbursement methodology. Notice has been given that any existing group that has implemented the cost-plus scheme must make one of two decisions: 1). drop the cost-plus scheme entirely or 2). PPO network will cancel their contract with the employer.

One wonders who the PPO network really represents? Do they represent the employer, or the hospitals that apparently can “make or break” them?

We think this PPO is short sight at best. Competing PPO networks are joining the fray, agreeing to work side-by-side with employers who use the cost-plus approach.

Build Your Own PPO Fee Schedule and Network for $175

If you are an employer looking for ways to control your ever increasing health care costs. you might want to create your own PPO network and fee schedule. Building a network is easy to do (we have built numerous regional networks for several years) – and creating a fee schedule is easy too. While we are not recommending or suggesting you employ this firm – – it will give you some idea of how easy and inexpensive it is to do.

Three Types of PPO Revenue Streams

Are you paying a monthly rental fee for your PPO network? Many self-funded plans do, paying on average $4 per employee per month. However, the PPO receives additional fees that are not disclosed to you, the employer. And these fees are paid by you in the form of higher claim amounts. We think that you would save money paying cash to providers rather than rely on a secretive PPO contract which you are prohibited from seeing.

PPO Dental Fee Schedule

Here is a dental PPO fee schedule found on the internet for all to see –

If only we could access the same information on medical insurance PPO fee schedules. The problem is that PPO’s won’t provide you with the information citing confidentiality agreements. Yet they continue to tout thier discounts as the best, better than any other competing PPO. “Trust me, my discounts are at least 20% better than anyone elses out there.”

GM&A Saves Employers Millions in Health Care Costs

GM&A of San Angelo, Texas, for the past ten years has been saving their clients millions of dollars in health care costs. They have done this by assisting employers in partnering with medical care providers on a fee basis that is fair and reasonable, rather than relying on PPO networks and insurance companies to negotiate “secret and confidential discounts” on their behalf.

For more information on GM&A, go to The Tyler Independent School District success story is worth reading.


Major Insurance Brokerage Fights Cost-Plus Concept

Does not take long for word to spread within the insurance industry it seems. A major national insurance brokerage is questioning the concept  of cost-plus provider reimbursement and is warning their clients and prospective clients against employing the strategy.  One would wonder why?

Could it be that undisclosed revenue streams to the brokerage, known to be paid by some insurance companies, and never disclosed to the client, could be jeopardized?  Could confidential bonus arrangements with brokers that are applied to each broker’s total book of business be affected?

For the reader’s information, a bonus arrangement on a broker’s total book of business is one way to hide compensation. So, when you ask the carrier if Agent Brown is receiving any kind of bonus on your group, they can honestly answer “no” since the bonus is pooled amongst all the broker’s groups and is not directly tied to your account.

There are other methods to “milk” the client too. For example, we have an email from a major insurance company to a broker outlining undisclosed compensation payable through the carrier’s pharmacy benefit manager. Here was the math outlined in the email:  254 employees X $9.34 Rx Rebate Amount)  X 12 months = $28,468 in undisclosed compensation above and beyond the $15,240 disclosed compensation ($5 pepm fee) and the 15% of stop loss commission.  Look for more information on this in a future posting.

Under a cost-plus arrangement, all monies are totally accounted for and fully transparent. That is a good thing.


If your agent recommends ABC Insurance Company, ask for a complete copy of his brokerage/agent agreement with ABC.

GPA Touts Success with Cost Plus Strategy

This memo was sent out by GPA this morning:
To all Agents:
As most of you know GPA is having great success in our Cost-Plus Option (CPO) Program and we have over 10,000 employee lives enrolled.  We are seeing on average of 40% to 50% savings beyond the PPO discounts.  You may have seen the press we received on our first client, Bill Miller BBQ, and now Forbes picked it up (see attached). bill-miller-forbes

Several of our agents are using this as a marketing opportunity to open new doors.  In fact according to Eric Hirschler, at USI Southwest Brokers, “The Cost Plus program has given me and my firm a significant advantage in opening prospective CPO doors that were previously closed.   I have added two new clients in excess of 2,000 lives to my portfolio as a result of the Cost Plus program.  Bottom line is that employers are fed up with the status quo and are looking for creative cost saving ideas.”   We are hearing more and more positive feed back like Eric’s story, and in conjunction with the present political climate, the CPO program is just what employers are looking for.  

 To avoid having to fight the PPO contact in place for the hospitals and surgery centers, GPA is now working with a physician only PPO, that is a national PPO and is a perfect match with the other PPO’s our clients are currently using.  For hospitals and outpatient surgical centers, the employees get to pick any of these providers in the United States because we will audit every single claim using the cost + method.   I am not aware of any PPO’s that can say they have 100% of all hospitals and outpatient centers in America , but our cost plus option can.   

 Stay tuned for more positive results and we hope GPA can help you successfully write new business and maintain your current block.  For any questions please contact Matt McCuen at 972 -744-2540 or Jeff McPeters at 972 744-2447. 

Editor’s Note: We have placed two groups with GPA using the cost plus strategy. One is Bill Miller Bar B Q and the other is San Patricio County, a political subdivision near Corpus Christi. Both groups have experienced significant cost reductions using this approach. To our knowledge, San Patricio County is the only political subdivision in Texas to implement this scheme. 

We are in disagreement, to some extent, on using a physician only PPO since we have found that physicians prefer to work directly with the client rather than through a middle party, i.e, a PPO vendor. And, we have empirical data on the two groups mentioned above that 115% of RBRVS  reduces overall provider claims by about 20% over the PPO discounts.