Comments for The Editor\'s Edge

Comment on Wishing For Waterloo by Connie Manis

Connie Manis — Wed, 10 Mar 2010 22:53:07 +0000

Great article, and many thanks for taking the time to publish it; I’m positive other readers benefited too. It really opened my eyes for some new conclusions that I hadn’t thought of before.

Comment on Dodd Dodders by John

John — Wed, 10 Mar 2010 15:00:40 +0000

The issue over fiduciary standards or suitability standards in the Dodd bill is a huge one for the industry, and the more press there is over it the worse the industry looks. I think insurance buyers assume that their agent is applying his expertise to provide them with the best product for the customer. The fact that we’re licensed experts, but we’re allowed to sell something merely suitable – even if we know there’s a better option available – opens the door for all kinds of commission-driven pocket-lining. This attracts sleazy salespeople and turns off client-driven salespeople.
If we want to be respectable financial service providers, it’s time to step up and make a real commitment to sell only the very best product for our customer. Maybe then people will hold the industry in higher esteem.

Comment on Tone Deaf by Steve Piontek

Steve Piontek — Wed, 24 Feb 2010 19:38:02 +0000

Chuck,
At this point we’re way beyond “if they’d only understand.” Health insurance has long been a political football and never more so than in the last year. It’s all about scoring points in the public arena and health insurers are target #1.
The point of the blog was that surely WellPoint and Anthem should have recognized that and found a way to put off their rate increase.

Do I understand what putting it off would do? Yes I do. But the point is that no matter how justified those increases might be actuarially they just give ammunition to those who want to blame the insurance business for the mess we’re in. The industry doesn’t exist in a vacuum. It simply can’t afford to play ostrich by continuing to insist how justified such increases are when the political consequences are so great.

When someone is saying they’ll put you in front of a firing squad, you don’t go and get the gun for them and offer to fill it with ammunition.

Steve

Comment on Tone Deaf by Chuck

Chuck — Tue, 23 Feb 2010 22:14:54 +0000

Or maybe, just maybe, they really did need the increase in order to keep the block of business viable, and maybe, just maybe, you don’t really understand the business or how waiting to increase rates can negatively affect all policyholders in a block of business. I am not a health guy, but I do have a basic understanding of how this works. Very few politicians or pundits, either conservative or liberal, have a clue as to what they are talking about. I don’t know the details of this 39% increase, but here’s the questions that need asking:

When was the last rate increase on this block and how much was that increase?

You may think it is a good idea to defer, given the current political environment, but for how long? 39% is not a good idea, but wait another year and it may need to be 60% or 80%. How do you think that increase would be received?

Do you understand the differences that will occur in the experience of a block of business if you increase rates one time by 80% over four years compared to, say, 20% per year each year? While politically expedient to defer, the delay will do substantial harm to insureds (hint: think anti-selection shock).

Dismiss the actuaries and their numbers if you want, but it would be refreshing if one or two could have a seat at the debate table. We’ve got politicians, lawyers, doctors, and pundits all putting their 2 cents in about how insurance should work, but when was the last time you saw an expert in insurance being interviewed on any of the news networks?

The 39% rate increase is a problem, but none of the pols and pundits really understands why these increases occur and, as a result, virtually everything being proposed to fix things is just going to make the problems worse. There are definitely needed insurance regulatory reforms that can help improve things, but until we deal with the cost of health CARE, we are (somewhat ironically) dealing only with the symptoms and not the disease.

Comment on Dirty Little Secret by Ric Cochran

Ric Cochran — Tue, 23 Feb 2010 20:00:01 +0000

The ACLI doth protest too much, methinks. Nevertheless, much of public relations is about publishing snapshots of the moral high ground.

There are only so many life policies in any year to re-sell that were not originally written for that purpose. Securitization is a beast with a voracious appetite. Short-term gains are too sweet for many to ignore. As with sub-prime mortgages, two lines of reasoning are for employed for engaging in presently profitable but long-term possibly ruinous practices: 1) Someone else will get the revenue if we don’t. Or, the great delusion, 2) This time is different.

Comment on Dirty Little Secret by John Whelan

John Whelan — Tue, 23 Feb 2010 19:28:36 +0000

Ken Martin said everything I wanted to say and Steve Leimberg said more than I could possibly digest…but it sure was fun to try!

Comment on Tone Deaf by Kate

Kate — Tue, 23 Feb 2010 16:38:38 +0000

Nothing that some strategically placed K Street dollars can’t remedy.

Now, bring on the defenders of the Constitution and charges of “hating our freedoms.”

Comment on Tone Deaf by John

John — Tue, 23 Feb 2010 14:59:20 +0000

On the other hand, maybe they’re trying to point up the unsustainability of the individual health insurance policy for health care financing. Every group of individual policyholders is subject to a death spiral as the sick stay in and the healthy opt out. Health ‘insurers’ all operate as benefit administrators for self-insured group plans too, and I’m sure health ‘insurers’ would much much prefer to simply administer a group plan that includes all Californians. More customers, no chance of a death spiral, insurers win by putting the individual health insurance policy in the dustbin of history.
It’s time to realize that ‘the business of health insurance’ should be what we have traditionally thought of as the TPA business. Proposing actuarially justified 39% premium increases is a good way to push the country in that direction.

Comment on Tone Deaf by lemonton

lemonton — Tue, 23 Feb 2010 14:44:47 +0000

Let me offer another angle to this drama. I am sure actuaries will have their claim numbers, expense numbers, profits, etc lined up to justify a 40% increase. However, it would be good to examine the admin expenses that are included in the rate determination. When you consider that the CEO is getting $24 million; the lobbying arm AHIP alone got $20 million; and who knows how many more millions go to other lobbying activities, plus the airplanes, luxury offices, bonuses, etc. Maybe the economic condition has caused a deterioration in the market, but surely looks it has not caused deterioration in what Steve describes “excesses of the health insurance business”. I am sure that if tone deaf insurers tone down those exceses maybe the increase could have been a more politically palatable amount. Just a thought.

Comment on Tone Deaf by jack mannion

jack mannion — Mon, 22 Feb 2010 15:54:52 +0000

Steve, another excellent to the point observation of how we have a tendency to be completely tone deaf. Mistakes like these can only come back to haunt our entire industry. Keep up your penetrating articles; they refresh me every week