Investments and catastrophic losses affected property/casualty insurance industry earnings for the first nine months this year as net income dropped 92%. Net income for the industry after taxes was $4.1 billion for the first nine months of 2008, compared with $50 billion during the first nine months in 2007.
December 19, 2008 – Agents from the Federal Bureau of Investigation have seized files from Brooke Corp. and are combing through the bankrupt insurance agency franchiser’s financial records, the special master appointed to oversee the bankruptcy confirmed.
Editor’s Note: What will be the immediate future of the Brooke Insurance Agencies in Texas?
Aetna is offering traditional medical policies for pets as it branches out for the first time from humans to cats and dogs.
The Hartford-based health insurer began underwriting the policies last week in six states, mostly in the West, and in the District of Columbia. Aetna eventually expects to sell in all 50 states.
Not all consultants use the same approach to serve a client’s needs. Consultants will typically take one of two basic approaches when they work with clients:
Consultants as Experts – Many think of consultants as experts. A medical doctor is an “expert” – you explain your symptoms to a doctor, who in turn asks you a few important questions and then tells you what you need to do to get better. This situation is not too different in a business context. The obvious advantage of hiring an expert is that they have knowledge that is not available within the client organization. One potential problem with hiring an expert is that the expert may not fully appreciate the nature of the client’s business and may recommend actions that cannot or do not address the problem the consultant was hired to solve. Alternately, a client may end up with some wonderful recommendations but be unable to implement any of them because of the unique politics or culture of the company.
Consultants as Facilitators – under this approach the consulant simply assists the client in going through the steps necessary to solve a problem. The consultant “oversees” the project while staff of the client does most of the work. The consultant does not implement changes, take actions, and does not tell the client what solution is best under the circumstances. Instead, the consultant assists the client in defining the problem, analyzing the situation, evaluating possible solutions, and deciding on the best solution and the best way to implement the option choosen. One problem using this approach is that the client group may not be capable of making tough decisions. Many times, the aim is to accomodate all the participant’s view-points and to keep peace in the company. As a consequence, although a consensus may be achieved, it may be at the cost of making the best decision.
Sometimes we get a call into our office, a referral, seeking our services as a consultant. Almost immediately the question is posed: “How much do you charge”? The biggest mistake we have made is to give out a pricing range, without first interviewing the potential client to determine expectations, needs and outcomes. Every consulting job is different and unique.
An excerpt from www.freehealth.com : 
“We are in a sad state. There are Americans who need life saving surgical procedures each day who simply cannot afford it, do not qualify for state or federal aid, do not know of any other options and die each day because of lack of access to healthcare. No one talks about this “tragedy” that happens on a daily basis in America, as doctors, hospitals, and the government turn their back on millions of Americans. Even more Americans don’t take necessary prescription drugs simply because they are unaffordable. ” Our American health care system is broken leaving many Americans with no access to health care.”
That is why it is so shocking to Americans that they can jump onto an airplane fly several hours outside of American Airspace, and wherever they land the price of surgery and prescription drugs are as much as 50% to 90% less than in America. Does that make sense? That a prescription drug costing $150 costs $15 outside of the US, or a injectible prescription drug that costs $1,800 costs $900 outside the United States. The exact same drug by the same drug manufacturer? Is the drug subsidized by the foreign government? No!
So, the next question the uninsured asks is what does the hospital look like and what experience do the doctors have. We have to ask that question because how would it be possibly to provide equal to or better care in a hospital for 90% less than in America. If a heart procedure that costs $100,000 could only cost $9,000 overseas than the hospital must be sub-standard compared to American hospitals, and the doctors less experienced than American doctors. Over 500,000 Americans who went overseas for surgical procedures in 2006 discovered that the hospitals were equal to or in some cases nicer than American hospitals. Some American hospitals describe the hospitals as “7 Star” hospitals , nicer than a Ritz Carlton, and they come back and “rave” about the tremendous experience of the doctors and how some were trained in the US or UK.”
“Did you know that 25% of doctors practicing in the U.S. were trained overseas?”
Do you know that the U.S. was rated 37th on the World Health Organization’s Health Report and that the U.S. was beat out by Costa Rica and Columbia?
Editor’s Note: Free health? There is no such thing as free health anywhere. Someone pays for it. But, it is a catchy phrase and will peak one’s curiosity. So, we went to visit www.freehealth.com and reviewed the power point – free20health20powerpoint20presentation – sure enough, the program does cost something, seems to be about $8 per month.
“Coca Cola Co., in a potentially groundbreaking move, plans to seek approval to fund retiree health care benefits though it’s South Carolina – domiciled captive insurance company.”
“Coca Cola’s retiree health care funding proposal comes at a time of increased employer interest in using captives to fund employee benefit risks.”
“Observers cite several reasons for the growing corporate interest in captive benefit funding. “You can save money and improve cash flow. There are pluses all the way around,” said Karin Landy, a managing partner with Spring Consulting Group in Boston.”
Risk & Insurance, December 2008
“Two innovations offer solutions outside of cost-shifting and dropping coverage for self-funding companies that still would like to provide cheaper but top-notch benefits to their employees.”
“One option is to get healthcare providers to charge what medical services actually cost.”
“Self-insured companies could also apply leverage to healthcare providers by sending workers someplace else for care. That’s a large part of the premise behind another innovation – a medical travel program.”
Editor’s Note: This is an excellent article. We have initiated these suggestions in some of our more progressive groups over a year ago. This is out-of-the-box kind of solutions that work. See entire article here – cheaper-insurance
Employer: How do we know we are doing much better this year than last year?
Risk Manager: What is this year is last year plus or minus this year’s change.
CFO: But change is the only constant, so why do we need to measure it?
To quantify risk management performance, the cost of risk must be measured. The components of Cost of Risk (COR) include 1. insurance premiums, 2. retained losses, 3. risk management department budgets, 4. risk management contract services. Results are compiled to show an average COR cost per $1,000 of revenues.
“An actuary is a person who passes as an expert on the basis of a prolific ability to produce an infinite variety of encomprehensible figures calculated with micrometric precision from the vaguest of assumptions based on debatable evidence drawn from inclnclusive data derived by persons of questionalble reliability for the sole purose of confusing an already hopelessly befuddled group of persons who never read the statistics anyway.” 
Daren Daley, Perr & Knight
Most people don’t know that when Theodore Roosevelt ran for President on the Bull Moose ticket, he proposed universal healthcare and a national insurance program. Since then, presidents have attempted to secure universal or near-universal healthcare coverage for Americans with limited success or none at all.
U.S. community hospitals enjoyed record profits in 2007, posting $43 billion more in revenue than expenses and creating the largest single-year jump in profit margins in at least 15 years, according to figures released by the American Hospital Association in its AHA Hospital Statistics 2009 Edition.
Recently we brokered the sale of an existing $500,000 term life policy for a client. The owner of the company was in the process of selling his business to a concern in Mexico, and no longer had a need for the coverage. There was no cash value (it was a term life policy). We solicited bids for the policy. An institutional investor (a New York Bank) submitted the highest cash offer. The transaction was completed and our client received a check for $50,000. 
Viatical and Life Settlement Brokerage is regulated by the Texas Department of Insurance.
Corpus Christi Independent School District selected Humana after a competitive Request for Proposal process. Chief reason cited was lower costs with Humana. Does that mean that Humana has steeper PPO discounts than Blue Cross? – http://www.caller.com/news/2008/nov/03/ccisd-health-plans-cheaper/
At www.freeerisa.com you can find a wealth of information through filed 5500 forms. For example, we checked on a San Antonio group of 450 employees and found that during a one year period they paid 28 agents a commission on voluntary products through one insurance company. This is an example of how some insurance companies distribute their product through various marketing levels. For example, there may be a State Manager, Regional Manager, District Manager, Area Manager, Sr. Sales Leader, Agent and Broker all paid in accordance to a commission hierarchy system. The money flows from the top down. In this case, this well known voluntary benefits carrier paid 28 agents a total of $47,883. The higest paid agent received $26,280 and the lowest paid agent received $2.
We have several clients who have decided to take control of their health care spending by reimbursing hospitals on a cost-plus basis rather than rely on PPO discounts off billed charges.
Here are a few recent examples:
Billed Charges Plan Payment
1. $59,248.72 $11,034.84
2. $ 7,682.20 $ 865.02
3. $25,245.63 $ 6,864.73
4. $443,076.26 $116,086.39
Under ERISA a Plan Fiduciary must pay only what is fair and reasonable. Fiduciary liability is transfered to a third party who handles claim appeals and provides defense in Federal Court. An insurance policy indemifies the employer. 
Political subdivisons may benefit from an Employee Benefit Trust – Click here and go to page 8 – http://www.kerrville.org/DocumentView.asp?DID=3377 See Chapter 222.002 Texas Insurance Code here – http://law.onecle.com/texas/insurance/222.002.00.html
A small but growing niche in health care delivery is becoming popular with both physicians and their patients. Physicians charge patients an annual fee of $1,500 and reduce their patient load down to about 600, which is significantly less than normal. No insurance company to mess with, no claims to file, less overhead. So, for about $900,000 per year, the physician can pay his staff, spend more time with his patients and make a good profit. These physicians provide same day appointments, house calls, extensive physicals and diagnostic testing and more consultation about topics such as diet and exercise.
In our continuing struggle to bring transparency to medical care pricing, we have yet another hospital claim that was incurred in August that reveals the level of price gouging we find in almost all hospital claims. Total billed charges were approximately $109,000. The hospital graciously offered to discount this by 7%, and would settle for $101,000 if we agreed to pay quickly. We repriced this claim under Medicare 2008 RVRBS and found that Medicare would have paid about $18,000 on this claim. The billed charges are 575% of Medicare.
We hope our client is not going to “play ball” with this hospital, as the bill is not fair and reasonable in our opinion.
As reported to CMS, this hospital’s cost for this admission was $27,862. Therefore, the hospital will make a profit of about $73,000 for this 2 week hospital admission. 
Since the employer is a political subdivision, and ultimately the taxpayers will foot this bill, we believe that if the hospital does not come to a reasonable and fair price, the taxpayers should be informed.
Blue Cross and Blue Shield of Texas, A Division of Health Care Service Corporation of Chicago, IL
Order Number: 080514
Date of Order: 6/13/2008
Order Final In: June
Action Taken: $250,000 fine with additional fine of $3,900,000 subject to possible dollar-for-dollar reduction to zero by restitution paid
Violation: Failed to make non-preferred benefits reasonably available to its insureds; Failed to maintain an accurate listing of its preferred providers
Editor’s Note: PPO networks change almost daily. So how does one maintain an accurate listing of its preferred providers?
Effective October 1, 2008 Medicare will stop reimbursing healthcare providers for 11 “never events” – considered reasonably preventable errors in healthcare delivery.
Editor’s Note: Does your health plan pay for Never Events? If so, how much did that cost your plan last year?
