Archive for November 1st, 2009

Health Insurance Renewals Make Little Actuarial Sense These Days It Seems

Sunday, November 1st, 2009


We are seeing group health renewals that make no actuarial sense these days. Renewals are all across the board. We are seeing renewals as high as +120%, with significant spread differences between carriers bidding on business. One of the BUCA’s told us last week, on a renewal we were working on with them, that they were not going to give any credit on claims exceeding the pooling point. And, there appears to be little interest amongst the carriers to negotiate renewals.

We are seeing carriers, bidding on the same group, using the same claim experience, duplicating benefits, with cost basis differencials of as high as 38%. Two underwriters, looking at the same data, are coming up with rates that statistically have no correlation.

I reviewed the renewal history of a group in Texas last week, and wrote to the client that I found the past two year’s rate adjustments to be unsupportable based on their own claim history. The client, whose background is in the health care field/insurance, wrote back and offered the following explanation:

Welcome to healthcare reform!  A lot of insurance companies are taking a playbook from the drug companies.  Over the last 3 years the drug companies have systematically and substantially raised their prices. They did so because they knew the government was going to beat them up for discounts.   The insurance companies are doing the same thing.  They know the government is going to beat them up so they increased their rates even when the MLR seems in line.  Most insurance companies don’t experience rate at 100%, they have a modified experienced /community rating system.  It allows them to “hedge” their bets during uncertain times. 
Guess what….We are in very uncertain times particularly if you are an insurance company.  Premiums always represents risk.  Some of the risk  inherently rests with the client, evidenced by the MLR; however, some of the risk is outside the client, which includes among other elements, regulatory hostility, provider contract renewals, increases in Rx prices and the like.
Though I understand Bill’s assertion, about what XXXXXXXXXXXXXXX should have done, the extra charges reflect their nervousness to the items mentioned supra and the government is making a lot of people nervous.  As I said, welcome to healthcare reform!

South Texas Insurance Agent to Be Sentenced

Sunday, November 1st, 2009

Admitted Felon Oilyvarez

Arnulfo “Half Guilty, Half Pregnant” Olivarez is scheduled to be sentenced for his crimes at 9:00 am on 24 November, 2009 in Federal Court, McAllen, Texas. Mr. Olivarez plead guilty to bribery of public officials in order to gain lucrative insurance contracts in South Texas. Last August 2008 Mr. Olivarez told Federal Judge Hinojosa that he was only half guilty of the crimes he was charged with, but guilty on the other half of the charges. If that is so, then Judge Hinojosa should consider reducing a possible 20 year sentence down to 10 years.

Is Brownsville Independent School District Practicing Obscurantism ?

Sunday, November 1st, 2009


Is the BISD paying more than they should for admnistration of their self-funded health insurance program? Did the Board of Trustees award the contract upon the advice of their insurance consultant, and if so, did the consultant’s representation of costs mirror the Administration Contract presented and approved by the BISD after the award of the contract? Did anyone check to compare the contract to be approved against the contract that was awarded? Information we obtained under the Open Records Act suggests otherwise.

Information at hand shows that the BISD may be paying +$370,000 more than they bargained for. We asked the BISD to investigate, to determine if indeed our findings are accurate. Their response was abstruse and at odds with our inquiry.

The BISD response, in our opinion, offers the general public both the frisson of uncertainty and the challenge of speculating. However well intended, speculating in an informed manner, as to the truth surrounding the recent Request for Proposal process of the BISD $38 million group health insurance plan, can be illusory and dangerous. Preference should be given to exploring the facts. We hope that the BISD will stop stonewalling the public and comply with public record requests honestly and expeditiously.

We have sent a second request to the BISD asking for clarification of the mysterious $370,000.