Archive for December 4th, 2010

BCBS Hospital Contract

Saturday, December 4th, 2010

 Molly Mulebriar reports she has obtained a copy of a BCBS hospital contract. She wants $1 million for it, and will accept cash only. She is willing to consider other offers, and suggests that a consortium of interested actuaries pool their resources to make an offer to purchase.

As a sign of good faith, Mulebriar has brokered an agreement with the Pope to act as facilitator of the sales transaction. The BCBS Hospital Contract, herein referred to as The Holy Graile, is under guard at the Vatican. Independent experts have verified authenticity.

In lieu of selling The Holy Graile, Mulebriar has challenged us to publish the document on this blog. However, she insists, to be fair, we publish Aetna, Humana, Texas True Choice,  and HealthSmart PPO contracts as well.

We are meeting with Mulebriar next week in Moose Breath Montana to discuss terms.

Trend – A Liar’s Game?

Saturday, December 4th, 2010

Trend is a fancy word for medical inflation. We all know that health care costs go up every year. We expect our health insurance rates to increase to cover the higher health care costs. Makes sense.

But, who calculates trend? Carriers do, and make sure you know it. Trend, they pontificate, is the evil ingrediant in ever rising health care costs. More than advanced technology, aging population, new government mandates, trend is why your health care costs go up every year they reason.

Recently we looked at a Humana and a Cigna renewal on two different groups. Both used a trend factor of about 14%. What that means is that both carriers project that health care costs are going to go up next year by 14% and they offered renewal rates accordingly.

Other carriers are using just about the same number.

But, a recent report released in November by New York based Mercer L.L.C. shows that trend is 6.9%, up from 5.5% last year (Business Insurance, November 22, 2010).

If Mercer is right, then how do carriers come up with a figure double that?

Or do the carriers know something we dont know? Do their PPO contracts contain escalator clauses which guarantees their providers a pay raise year after year? Do PPO escalator clauses drive up health care costs?

Editor’s Note: We know that a few actuaries visit our site on occassion. We welcome their response to this post. Leave your comment/s at