Archive for December, 2008
Millions await Obama’s action on health insurance - Steven Wevodau
But short of the generosity of readers - not a good national solution - Goroncy and millions like her are awaiting the sweeping health reform now being considered by President-elect Barack Obama.
Obama’s plan, which has not been formally announced, could mark the biggest change in health care in 40 years. A central goal will be to cover 50 million Americans who don’t have insurance. It is conceivable that all Americans will be required by law to have health insurance.
A principal architect of Obama’s reform - Tom Daschle, nominated to become secretary of the Health and Human Services Department - has written at length about creating a powerful new board that would control health-care spending much like the Federal Reserve Board influences the nation’s monetary policy.
Experts say for any plan to pass, it must contain soaring medical costs.
Obama’s reform will almost certainly attract criticism that it overly expands the role of government in health care. And American history is littered with failures to revamp the system - recently Hillary Clinton’s effort in 1993.
Less in dispute are the inadequacies of the current system. More than 45 million Americans had no health insurance in 2007, according to the U.S. Census Bureau, and that was before the current recession.
In Pennsylvania, for example, 145,800 working adults - an all-time high - were on a waiting list for state-subsidized health insurance in December, an increase of 15,000 since November, the Insurance Department reported.
The uninsured often struggle harder for care; they face longer waits for treatment and on average die sooner than those with insurance, studies show. And in at least two examples in this series, a lack of access to care earlier has led to more expensive treatment later.
Spending on health care, 17 percent of the nation’s gross domestic product in 2009, will reach 20 percent by 2017 and “poses a serious threat” to the nation’s fiscal health, said a report last week by the Congressional Budget Office.
What’s more, said the report, much of that spending is of questionable benefit.
“Up to one-third of that spending - more than $700 billion - does not improve Americans’ health outcomes,” wrote Sen. Max Baucus (D., Mont.), chairman of the Senate Finance Committee, in a recent 89-page health policy paper that many see as an important Democratic blueprint for health reform.
Baucus added that “in addition to the uninsured, another 25 million Americans are underinsured, without enough coverage to keep their medical bills manageable.”
The health-care system is often ridiculed as no system at all. “Kafka could not have designed a more bizarre system,” said Robert Field, head of health policy at the University of the Sciences.
Field, among many others, says he is optimistic that some reform will be passed by Congress, helped along by the recession and huge bailouts of the financial and auto industries.
“Our frame of reference has changed,” said Field. “Programs in the billions of dollars seemed like a lot of money . . . that’s beginning to look like pocket change.”
“I do think in a funny way, the economy’s demise has forced people to think about what’s really important,” said Len Nichols, director of the health policy program at the New America Foundation, a centrist group in Washington. “So when people began to realize we’re going to have to restructure a whole lot of our economy, how can you do that and ignore health care?”
The Inquirer in the last few months has chronicled the stories of people whose situations highlight a number of problems:
Too many young Americans - 30 percent between 18 and 24, and nearly that many between 24 and 30 - don’t buy insurance. They feel that they don’t need it or can’t afford it.
On any given day, at least 300,000 Americans are caught in a Medicare gap. Too sick or injured to work, they qualify for federal disability income but must wait two years by law before they are eligible for Medicare. And they have no resources to purchase health insurance on their own.
Many are denied coverage because they have preexisting conditions or can’t afford the high premiums they are quoted because of a preexisting condition.
Some have insurance but get so sick that they reach the lifetime cap on their plan - and promptly find themselves uninsured.
Some experts predict that next year’s reform - whatever its final shape - could fill many of the cracks described in The Inquirer series.
Consider the case of Goroncy, the uninsured home health aide. Her employer could be mandated by law to give her health insurance or to make a contribution to new government-sponsored insurance plan that would cover her.
Goroncy herself might be required to purchase insurance - either through her employer, an individual plan, or a new government-sponsored insurance plan. And if she can’t afford insurance, she might receive a government subsidy or a tax incentive.
Buying insurance might remain voluntary, not mandatory, supported by subsidies. The theory is that Goroncy would not be required to buy insurance, but a subsidy would make it affordable for her so naturally she’d purchase it.
In the campaign, Obama said he favored only making insurance mandatory for children, but voluntary for adults, sweetened by subsidies that would make it possible for the uninsured to afford it.
Hillary Clinton during the campaign favored mandatory participation.
Several experts say that the economic downturn, with so many people losing jobs and insurance, could give Obama and Congress the political cover they need to make participation mandatory. “I think the environment may have changed,” said USP’s Field. “We’re in much more of a crisis setting.”
The health-insurance industry last month came out in support of universal coverage and an end to a primary means of denying coverage to sick people - the preexisting-condition clause - but only if participation is mandatory.
“That’s great political cover for Obama,” said health economist Tom Getzen of Temple University’s Fox School of Business. “It’s what Hillary wanted to begin with. You need everybody in one system. If you’re going to control costs, you can’t have some people in the system and some people out of it.”
The very simple theory of insurance is this: It only works with very broad participation. You can best afford to cover the sickest if the healthiest are also paying in.
Conservatives are leery of many of the proposals being discussed, in particular a new government-funded program intended to provide insurance to people who can’t buy it anywhere else.
“The creation of a new public plan would result in millions of Americans losing their employment-based coverage coupled with a massive expansion of government coverage and financial control,” writes Robert E. Moffit, director of the Center for Health Policy Studies at the Heritage Foundation.
Some experts say Obama must bring enough Republicans on board, and build a consensus, if he is to succeed. The new president will have his work cut out.
“I am concerned that some proposals will make your health insurance more expensive, not less, and do nothing to protect your current coverage,” Jon Kyl, a Republican senator from Arizona, wrote to his constituents last week.
“A government-run plan and an employer mandate, I believe, would exacerbate, not fix, the problem of growing health care costs and would erode employer-sponsored health coverage,” Kyl added. “I believe Congress must build upon, not completely dismantle, our current health care system.”
Millions of Americans who can’t afford the health care they desperately need are waiting to find out what that change will be.
Some who lacked coverage
As the year ends, The Inquirer wanted to take a moment and update readers on some of the people whose stories have been told in this series.Karen Goroncy, the home health worker without insurance in Washington, Pa., was promised insurance by a reader. She expects to have surgery to repair her painful hernia after the New Year.
Ruby Spencer, the uninsured 61-year-old widow from Logan, had surgery in November to remove a massive tumor in her abdomen, which turned out to be benign.
The Inquirer had chronicled how Spencer was bounced from welfare office to emergency room to city clinic, without getting any help.
A reporter referred her to health-law advocates and started asking local officials about her situation, which led to her getting Medicaid and surgery.
“I’ll never be able to thank you enough,” Spencer wrote in a note recently. “I’m doing very well and I owe it all to you. Thank you. Thank you. Thank you.”
Jean Hawk of Tower City, Pa., who cut back on drugs for her kidney transplant after she lost her insurance, was contacted by Social Security after the Inquirer story, and told she likely is eligible for Medicare. (She had been told the opposite before the story.) She was encouraged to apply again, and did so on December 3. She’s waiting to hear back.
“I cannot thank you enough for what you did for me,” she wrote.
Iyasu Habtemicael - Izzy - was driving a flower truck and working in a parking garage, both part time, and had no health insurance. He nearly died when his diabetes soared out of control. He’s now working full time at a University of Pennsylvania garage - with health insurance - and feeling better.
Others received incredible support from readers - notes of encouragement, small cash contributions, and, in a few cases, even worldwide attention.
“I’ve had some wonderful people write me and wished me well plus a few gifts also,” said Dan Daskus, 41, of Minersville, Pa., who got cancer, lost his job and health insurance, and went into debt from medical bills. “I also did an interview with Danish television.”
And even the unexpected happened.
Richard Hershman, divorced four times, a former drug addict now receiving methadone, had suffered without health insurance. But he also had lost touch with nearly everyone in his life. His only friend was his dog, Blue.
After the Inquirer story, a group of friends he had known as a boy in West Philadelphia contacted him, and now he goes to their houses for Sunday dinners and watches the Eagles with them. He went over to one rediscovered old friend’s house for a Christmas meal.
“Now I have REAL FRIENDS again,” he e-mailed. Maybe that’s the best medicine of all.
- Michael Vitez
No money, no insurance, no mercy
POSTED BY STEVEN WEVODAU
Seattle Times health reporter
A Valley Medical financial counselor told the Renton woman at the time not to worry; if she couldn’t pay for her treatment, the hospital would chalk it up as charity care.
But it didn’t do that.
A month later, Gamba received a statement for the full cost of her gallbladder surgery: $18,410. She immediately sent the Renton hospital a letter explaining that she was broke, and again requested a charity write-off. Valley Medical then knocked off 30 percent — or $5,469 — from her bill but insisted she pay the rest.
“Had I known that I’d owe this amount, I would have kept my gallbladder and gone home,” Gamba, now employed as a counselor for Senior Services, wrote back. “I am begging for your compassion.”
Gamba shouldn’t have had to beg.
Under Washington law, Gamba and other patients with annual incomes below the poverty level — $10,400 for a single person — are not required to pay anything at any licensed medical or psychiatric hospital in the state. What’s more, the hospitals have signed binding, if voluntary, pledges to grant discounts, in some cases even to middle-income patients.
The problem, according to advocates and attorneys for patients, is that people entitled to free care don’t always get it. Some patients say they never were told about the charity-care option, or that they quickly forgot it in the haze of hospitalization.
The complaints come at a time of renewed scrutiny over whether nonprofit hospitals are providing enough charity care to justify their tax breaks. While Washington’s 45 nonprofit hospitals saved $47 million in property taxes in 2006, a joint legislative committee issued a report last year concluding that nonprofits were no more likely than their for-profit counterparts to grant charity care.
In Congress, Sen. Chuck Grassley, R-Iowa, has been aiming to impose minimum charity-care levels on tax-exempt hospitals. In Olympia, a state bill that would have increased charity-care standards died in 2005.
Two years later, members of the Washington State Hospital Association offered a fix: For patients earning up to twice the poverty level, the hospitals offered to voluntarily cap charges at the hospitals’ actual costs, which can be half of the billed charges. Patients earning between two and three times the poverty level would have to pay only 30 percent above cost.
Some miss out
Despite the widely publicized pledge, Matt Geyman, a civil-litigation attorney with Phillips Law Group in Seattle, said some poor patients never realize — or simply aren’t told — that they shouldn’t have to pay.
“It’s not at all uncommon for hospitals to send bills to collection agencies without the patients ever knowing about charity care,” said Geyman, who frequently does pro bono work for patients.
Hospitals are required to alert the state Department of Health whenever they reject a charity-care applicant for the second time. But the state has received only a handful of such notifications, and acknowledges that ensuring compliance with charity-care rules is largely up to the hospitals themselves.
Earlier this month, Geyman filed suit against a collection agency working for Seattle’s Northwest Hospital on behalf of an uninsured patient who was sued for nonpayment of a $3,000 bill. The woman told the bill collector that she couldn’t afford to pay and asked for debt relief but was told it was too late.
Washington’s statute does not set a time limit on when an eligible patient can seek charity care. Geyman said he believes many patients have been similarly misinformed and is seeking to have his suit declared a class-action case.
“But the problem is that in 99 percent of the cases, the patients don’t get lawyers and they don’t know about their rights,” Geyman said.
Bob Steigmeyer, Northwest’s chief financial officer, said his hospital has no reason to deny charity care to those who qualify. In 2007, Northwest provided $3.8 million in charity care, including free care for those earning up to twice the poverty level. It wrote off an additional $9.7 million in bad debts from patients who simply didn’t pay their bills.
“We try to be the patients’ advocate in all channels for financial [help],” Steigmeyer said. Even so, he said, “we live in an industry where margins are thin to begin with,” and the hospital must balance its charitable mission against financial prudence.
Narrow rules
While hospitals are legally bound to provide charity care, doctors practicing independently inside hospitals are not. And although hospitals must treat any person needing emergency care regardless of ability to pay, they are not so required in nonurgent cases.
But hospitals are free to offer more-generous help — and many do.
For instance, in cases of “severe hardship,” the University of Washington Medical Center and Harborview Medical Center both will write off some charges for patients whose income exceeds the hospitals’ charity-care cutoffs.
Swedish Medical Center, on the other hand, has a more specific policy, saying “catastrophic” charity care is available whenever a patient’s hospital charges equal 10 percent of his annual income.
Results may vary
The seemingly random policies mean that sudden illnesses can leave uninsured patients impoverished at some hospitals but not at others.
When Theo Kostelecky, of Duvall, drove himself to Kirkland’s Evergreen Hospital Medical Center in what turned out to be the throes of a heart attack, he also walked into financial devastation.
Kostelecky earns more than $40,000 a year as a live-in caretaker for a wealthy Seattle couple who do not provide insurance coverage. His income is twice Evergreen’s limit for charity care.
Kostelecky’s three-day stay at Evergreen in March totaled $56,000. He frantically sought help from the hospital but was turned down, despite the fact that Evergreen’s policy gives it discretion to waive income limits in dire circumstances.
Driving just seven miles farther could have prevented much of Kostelecky’s ordeal. Overlake Hospital Medical Center in Bellevue provides “catastrophic charity” based not only on income but on the size of a bill. For Kostelecky, that could have erased 80 percent of the charges.
Chrissy Yamada, Evergreen’s chief financial officer, said she sympathizes with Kostelecky’s plight. Evergreen expects to provide about $4.5 million in charity care this year, and anticipates that number spiking significantly in 2009.
Granting charity care to Kostelecky “would come at the expense of other things at the hospital,” Yamada said.
Financial destruction
Kostelecky, 59, is preparing to file for his second medical-related bankruptcy in three years. He fears that the bankruptcy will financially cripple him and his longtime partner, Peter Haviland.
“If this goes through, I will be destroyed for life,” Kostelecky said.
Gamba, the gallbladder patient, understands that desperation.
When Gamba failed to convince Valley Medical that she was indigent, she turned to Solid Ground, a poverty-action group, which eventually connected her with Geyman, the attorney. It took a letter from Geyman — and, according to Valley Medical, belated proof of Gamba’s lack of income — for the hospital to grant her full charity care last December.
Gamba, 60, then fainted and fell on a table while visiting Bremerton six months later. She was rushed to the emergency room at Harrison Hospital, where doctors found nothing wrong. At the time, Gamba was working half time for the city of Seattle for less than $10 an hour, with no benefits.
She now owes Harrison Hospital $4,236 — a bill she says she can’t pay — and is preparing to file for bankruptcy.
Kyung Song: 206-464-2423 or ksong@seattletimes.com
40|86 Strategic Income Fund Revises Dividend - Steven Wevodau
The Fund is managed by 40|86 Advisors, Inc., a wholly owned subsidiary of Conseco, Inc. (NYSE: CNO - News). Conseco, Inc.’s insurance companies help protect working American families and seniors from financial adversity: Medicare supplement, long-term care, cancer, heart/stroke and accident policies protect people against major unplanned expenses; annuities and life insurance products help people plan for their financial futures.
Source: 40|86 Strategic Income Fund
Health-care premiums may soar in ‘09 - Steven Wevodau
Some firms getting slammed with 18%-31% hikes
Already struggling in a tough economy, many small employers are about to face another big hit: markedly higher increases in health-insurance premiums as they head into 2009.
For many of these companies, the steeper increases couldn’t come at a worse time, when the economy is weakening and credit is harder to come by.
“We can’t pass these costs on to our customers; the market just won’t bear it,” said Daniel Lance, who owns E.CAB, a St. Petersburg, Fla., firm that produces finishes and fixtures for elevator-cab interiors.
After no increase last year, E.CAB’s premiums jumped 75 percent to about $6,800 a month when its annual Blue Cross Blue Shield of Florida policy came up for renewal last month. Much of the jump was triggered by the hiring of a few older workers by the 25-employee firm, pushing it into a higher-cost actuarial bracket. E.CAB couldn’t get a better price from rival insurers.
Rather than pass the cost on to his employees, who aren’t required to contribute premiums for themselves though they do for family members, Mr. Lance said he’s forgoing new wood-cutting equipment he had planned to purchase. “I just felt it was a bad time to pass on costs,” he said. “The employees are having a tough enough time, too.”
As hard as it has been for businesses to absorb ever-higher health-care costs each year, the collective premiums they paid actually had climbed at a slower rate in recent years. But as small businesses begin to receive their annual renewal notices, employers and health-insurance brokers in the South, Midwest, and California report noticeably steeper rises. Some premium increases being quoted to employers are double those quoted just a few months ago.
In a nationwide survey of 30 insurance brokers released by Citigroup in November, more said insurers were raising premiums at a faster rate than those who reported slowing increases.
For-profit health insurers have seen profit margins shrink this year in the face of higher-than-expected medical costs and pricing missteps, not to mention membership declines as more businesses drop or cut back coverage. While companies with 500 or more employees might have leverage to negotiate, health insurers are “being much more rigid” with smaller firms, said Edward Kaplan, national practice leader at Segal Co., an employee benefits consultancy.
Adding to upward pressure on prices could be dozens of not-for-profit Blue Cross and Blue Shield plans, whose investment portfolios have taken a beating in the recent market turmoil.
C. Steven Tucker, a health insurance broker for small businesses in Illinois, said his clients received increases of 28 percent to 31 percent last month, compared to typical increases of 18 percent to 20 percent. In Florida, brokers say many plans hit with high increases are high-deductible plans eligible to be used with a health savings account.
A few years ago, health insurers tried to win business with the new health savings accounts by charging low premiums, but since the most popular ones pay 100 percent of costs after a $1,500 to $3,000 deductible, their costs have been higher than anticipated.
Dottie Jessup, who owns bicycle shops in Clearwater and Palm Harbor, Fla., with her husband, Tom, said they and their 25 employees, who share premium costs 50-50, couldn’t handle a 12.5 percent increase set to go into effect this month.
Instead, they went with their only other option: to raise one plan’s deductible to $2,500 from $2,000 and the other to $3,500 from $2,850, in exchange for just a slight premium increase.
“Our concern is that we’re getting to the point where we’re wondering where this is all heading, because you can only reduce benefits and contain costs so much,” she said.
StanCorp Financial Group, Inc. to Announce Fourth Quarter 2008 Financial Results on January 27, 2009 and Hold Webcast Conference Call on January 28, 2009
POSTED BY STEVEN WEVODAU
To listen to the live webcast of this conference call, logon to www.stancorpfinancial.com and select Investor Relations. Windows Media Player™ will be required to listen to the webcast. A webcast replay will be available starting approximately two hours after the original broadcast. The replay will be available through March 20, 2009.
A telephone replay of the conference call will also be available approximately two hours after the conference call by dialing 800-642-1687 or 706-645-9291 and entering conference identification number 78690091. The replay will be available through February 6, 2009.
About StanCorp Financial Group, Inc.
StanCorp Financial Group, Inc., through its subsidiaries marketed as The Standard — Standard Insurance Company, The Standard Life Insurance Company of New York, Standard Retirement Services, StanCorp Mortgage Investors, StanCorp Investment Advisers, StanCorp Real Estate, StanCorp Equities, and StanCorp Trust Company — is a leading provider of financial products and services. StanCorp’s subsidiaries serve approximately 8.4 million customers nationwide as of September 30, 2008, with group and individual disability insurance, group life, AD&D and dental insurance, retirement plans products and services, individual annuities and investment advice. For more information about StanCorp Financial Group, Inc., visit its Web site at www.stancorpfinancial.com.
Contact:
StanCorp Financial Group, Inc. Investor Relations and Financial Media Jeff Hallin, 971-321-6127 E-mail: jhallin@standard.com or General Media and Public Affairs Bob Speltz, 971-321-3162 E-mail: bspeltz@standard.com
Source: StanCorp Financial Group, Inc.
Eastern Life & Health Introduces New Vision Product - Steven Wevodau
“Working with Eastern Life & Health is an honor,” said Ric Steere, vice president of sales for VSP Vision Care. “But the real winners here are the employers and employees who will immediately enjoy the world-class customer service, best-in-class doctor network and robust vision plan that VSP Vision Care offers them.”
ELH will roll-out its vision products to Pennsylvania, Georgia and Michigan, effective February 1, 2009, with other selected states to follow. The vision insurance plan will be available on both an employer-paid and voluntary basis for two to nine lives and 10+ life groups. The vision discount program will be offered as an add-on for no additional charge to new dental lines of coverage. ELH currently offers dental, short- and long-term disability, and term life insurance products on both an employer-paid and voluntary basis for two to nine lives and 10+ life groups. ELH offers multi-line discount packages for employer groups selecting three or more lines of coverage.
Founded in 1910, ELH provides group ancillary benefit insurance products to customers in 16 states, distributed through independent insurance agencies. EIHI operates through its subsidiaries a domestic casualty insurance group specializing in workers’ compensation, a domestic accident and life insurance company, an offshore specialty reinsurance company and a third-party claims administration company. ELH and EIHI are headquartered at 25 Race Avenue in Lancaster, Pennsylvania. Their Web addresses are www.easterninsuranceholdings.com and www.elhins.com, respectively.
FORWARD LOOKING STATEMENTS
Some of the statements contained in this press release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “project,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms or other terminology. Forward-looking statements are based on the opinions and estimates of management at the time the statements are made and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements, therefore no assurance can be given that management’s expectations, beliefs or projections will occur or be achieved or accomplished. Factors that could affect the Company’s actual results include, among others, the fact that our loss reserves are based on estimates and may be inadequate to cover our actual losses; the uncertain effects of emerging claim and coverage issues on our business; the geographic concentration of our business; an inability to obtain or collect on our reinsurance protection; a downgrade in the A.M. Best rating of our insurance subsidiaries; the impact of extensive regulation of the insurance industry and legislative and regulatory changes, a failure to realize our investment objectives; the effects of intense competition; the loss of one or more principal employees; the inability to acquire additional capital on favorable terms; a failure of independent insurance brokers to adequately market our products; and the effects of acts of terrorism or war. More information about these and other factors that potentially could affect our financial results is included in our Form S-1 Registration Statement, filed with the U.S. Securities and Exchange Commission and in our other public filings with the U.S. Securities and Exchange Commission. Readers are cautioned not to place undue reliance upon these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update any forward-looking statements. This press release also does not constitute an offer to sell, or a solicitation of an offer to buy, EIHI securities. Such an offer will be made only by means of a prospectus.
Source: Eastern Life & Health Insurance Company
Lehman’s chaotic bankruptcy destroyed billions - Steven Wevodau
by: JEFFREY MCCRACKEN
Monday, December 29, 2008
As much as $75 billion of Lehman Brothers Holdings Inc. value was destroyed by the unplanned and chaotic form of the firm’s bankruptcy filing in September, according to an internal analysis by the company’s restructuring advisers.
A less-hurried Chapter 11 bankruptcy filing likely would have preserved tens of billions of dollars of value, according to a three-month study by the advisory firm, Alvarez & Marsal. An orderly filing would have enabled Lehman to sell some assets outside of federal bankruptcy-court protection, and would have given it time to try to unwind its derivatives portfolio in a way that might have preserved value, the study says.
It is too early to say how much Lehman creditors will recover in the bankruptcy process. Unsecured creditors have asserted in court filings that they are owed about $200 billion. The bond market is projecting a recovery of about $20 billion, or about 10 cents on the dollar, for these creditors.
Lehman’s large unsecured creditors include the federal government’s pension-insurance arm, the Pension Benefit Guaranty Corp. The group also includes the Bank of New York, as trustee for the bondholders, and the German government’s depositor-insurance arm.
“While I have no position on whether or not the federal government should have provided further assistance to Lehman, once the decision was made not to provide further assistance, an orderly wind-down plan should have been pursued. It was an unconscionable waste of value,” said Bryan Marsal, co-chief executive of the advisory firm who now serves as Lehman’s chief restructuring officer.
Mr. Marsal estimates that the total value destruction at Lehman will reach between $50 billion and $75 billion, once losses from derivatives trades and asset impairment are combined.
Much of the destruction of value came from the bankruptcy filing of the parent guarantor, Lehman Holdings. The filing triggered a cascade of defaults at subsidiaries that held trading contracts. That created what is known as an “event of default” for Lehman’s derivatives. This resulted in a termination of more than 80 percent of the transactions with counterparties — typically major European and U.S. banks such as J.P. Morgan Chase & Co., said Mr. Marsal. In all, the bankruptcy canceled 900,000 separate derivatives contracts.
The problem for creditors is that this also terminated contracts in which Lehman was owed money. Mr. Marsal said a few extra weeks would have allowed Lehman to transfer or unwind most of its 1.1 million derivatives trades, preserving more cash for creditors.
Overall, the losses from derivatives trades and related claims cost Lehman’s unsecured creditors at least $50 billion, according to the analysis. The findings, yet to be made public, eventually will be presented to the U.S. Bankruptcy Court and to Lehman’s creditors.
“This filing, which was pretty much dictated to the board of directors at Lehman that weekend, occurred with no planning,” said Mr. Marsal, whose New York firm was hired by Lehman’s board around 10:30 p.m. Sept. 14. That was just hours before Lehman filed for the largest bankruptcy in U.S. history, after the U.S. government declined to offer its backing.
That decision has been widely debated since mid-September, as it touched off a stock-market panic and credit crisis from which markets have yet to recover.
“Had fundamental rules of crisis management been followed, much of the value that was lost by the unsecured creditors would have been prevented. This loss in value was a big hit to the public holders and could have been mitigated,” Mr. Marsal said.
Mr. Marsal also criticized the way Lehman sold off assets. The unplanned bankruptcy pushed down prices for Lehman assets in an already depressed market. An example is Lehman’s trading and investment-banking businesses, which before the filing made about $4 billion in annual profits and were sold for less than $500 million. Experts say such businesses — once separated from Lehman’s real-estate portfolio — could have garnered a higher price in a more orderly wind-down.
About 150 Alvarez & Marsal employees are on site at Lehman offices in New York, London and Hong Kong, combing through creditor claims and managing operations. They are piecing together what happened at the moment of Lehman’s collapse.
An additional 300 Lehman employees are still working at the firm, helping in a wind-down process that could take as many as three years. Among those working with Mr. Marsal are Lehman Chairman and CEO Richard Fuld Jr., who will be leaving at the end of this year, and Dave Goldfarb, the former Lehman chief financial officer who is now chief strategy officer. Mr. Marsal will succeed Mr. Fuld as CEO.
While bondholders will lose as much as 90 percent of their investment, one entity got all of its money back — the Federal Reserve. At one time it was owed about $63 billion by Lehman, according to Mr. Marsal. But a postbankruptcy sale of some Lehman assets to Barclays PLC meant that all of the debt to the government was repaid.
Copyright © 2008, World Publishing Co. All rights reserved
OptumHealth Expands Access to Portable Personal Health Records for Millions of Americans
POSTED BY STEVEN WEVODAU
GOLDEN VALLEY, Minn. - (Business Wire) OptumHealth Inc. today announced it is providing a free personal health record (PHR) that is portable and can be shared with physicians, family member or others. The PHR is available through the Web site www.myOptumHealth.com and provides the same portability and sharing capability that is also now available to individuals with PHRs set up through more than 1,000 employer private health portals managed by OptumHealth, as well as the myUHC.com portal used by 25 million UnitedHealthcare members.
These attractive expanded features are made possible through collaboration between OptumHealth and Microsoft Corporation. Individuals can now transfer their PHR information from an OptumHealth-managed health portal directly into a Microsoft® HealthVault™ account, which is a security-enhanced, Web-based consumer health platform. Information stored in HealthVault will be “portable” in that it will be available to members even if they change jobs or health plans, providing a truly portable record of their health.
The OptumHealth PHR is free and available from www.myOptumHealth.com or accessible from the private health portals OptumHealth manages for employers and health plans, including UnitedHealthcare’s myUHC.com. It enables individuals to store, maintain and retrieve their comprehensive health history in a secure and central location. With the ability to now transfer such information to Microsoft HealthVault, a broad range of health and wellness information such as physician visits, diagnostics and treatments will be pre-populated and combined with the member-generated information into one online location. Individuals transferring information into a HealthVault account can then share it, as desired.
“Connecting myOptumHealth.com and our private health portals with Microsoft HealthVault allows consumers to share their personal health information with health care providers, health plans, loved ones or others to help make more informed decisions about health care,” said Scott Heimes, senior vice president of OptumHealth Consumer Solutions. “Think of a mom whose child has food allergies. She can populate the child’s PHR with prescription information, emergency contact information, lab results or other personalized health content. And now, through HealthVault, she can share this information with her child’s daycare provider.”
“We’re pleased to work with OptumHealth to help individuals become more actively engaged in managing their health, and the health of their family members,” said Peter Neupert, corporate vice president of Health Solutions Group at Microsoft. He added that “myOptumHealth.com and HealthVault represent a new generation of consumer-centric health care services that can empower individuals and their health providers to make optimal decisions about care and wellness.”
The collaboration with Microsoft is the next step in OptumHealth’s plan to provide consumers with the most relevant health and wellness information available online. In December, OptumHealth launched the free consumer health site, www.myOptumHealth.com, which also offers a broad range of evidence-based health and wellness information, video and interactive tools to assist consumers in proactive health management. The OptumHealth PHR is also integrated with other health and wellness resources, including wellness coaching programs and incentive and communications services. The OptumHealth PHR is also available to the millions of UnitedHealthcare members via the myUHC.com member services portal.
OptumHealth is the largest publisher of private health portals and interactive health management solutions in the United States, managing more than 1,000 private health portals for employers, health plans and public sector entities.
About OptumHealth
OptumHealth Inc. helps individuals navigate the health care system, finance their health care needs, and achieve their health and well-being goals. The company’s personalized health advocacy and engagement programs tap a unique combination of capabilities that encompass care solutions, behavioral solutions, specialty benefits and financial services. Serving 60 million people, OptumHealth is one of the nation’s largest health and wellness businesses, and is a UnitedHealth Group (NYSE:UNH) company. More information about OptumHealth can be found at www.OptumHealth.com.
OptumHealth
Molly McMillen, 763-797-4559
Sr. Manager, External Communications
Humana Military Healthcare Services Announces Sponsorship of Bell Helicopter Armed Forces Bowl - Steven Wevodau
LOUISVILLE, Ky.–(BUSINESS WIRE)–Humana Military Healthcare Services (HMHS), a wholly owned subsidiary of Humana Inc. (NYSE: HUM), proudly announces its sponsorship of the Bell Helicopter Armed Forces Bowl. The sixth annual college bowl game recognizes and pays special tribute to active duty and veterans from all branches of the United States Armed Forces with various patriotic events held throughout the game. The Armed Forces Bowl will be held on December 31, 2008 at 11:00 a.m. (CST) in the Amon G. Carter Stadium in Fort Worth, Texas; and will feature the University of Houston taking on the U. S. Air Force Academy.
As part of the sponsorship, military troops will be invited by the Armed Forces Bowl Committee to attend the game. The game will be broadcast nationally on ESPN and overseas on Armed Forces Television.
“Humana Military is thrilled to be a part of the excitement and provide an opportunity for troops to be a part of the festivities as well,” said Larry Burchfield, senior regional executive for HMHS. “We feel the Armed Forces Bowl is a way to thank those who have sacrificed so much and will be a fun way for them to ring in the new year.”
The day before the game, the area surrounding the stadium will host a public display of military equipment, called the Armed Forces Adventure Area, and continue through game day. Team pep rallies will be at this location, followed by a fireworks show the night before the big game. In addition, there will be a tribute during each quarter of the game to a different branch of the military, as well as a patriotic halftime show. For more information, please visit www.ArmedForcesBowl.com.
About HMHS
HMHS, headquartered in Louisville, KY., has been a Department of Defense contractor for the administration of the TRICARE program since July 1, 1996. In August 2003, HMHS was awarded the contract to provide health benefits support and services to approximately 2.8 million active duty and retired military and their eligible family members in the 10-state South Region. HMHS was also awarded the Department of Defense’s contract to provide healthcare services and support for active duty service members and their families located in the Commonwealth of Puerto Rico, in February 2004.
About Humana
Humana Inc., headquartered in Louisville, Kentucky, is one of the nation’s largest publicly traded health and supplemental benefits companies, with approximately 11.7 million medical members. Humana is a full-service benefits solutions company, offering a wide array of health and supplementary benefit plans for employer groups, government programs and individuals.
Over its 47-year history, Humana has consistently seized opportunities to meet changing customer needs. Today, the company is a leader in consumer engagement, providing guidance that leads to lower costs and a better health plan experience throughout its diversified customer portfolio.
More information regarding Humana is available to investors via the Investor Relations page of the company’s web site at http://www.humana.com, including copies of:
- Annual reports to stockholders
- Securities and Exchange Commission filings
- Most recent investor conference presentations
- Quarterly earnings news releases
- Replays of most recent earnings release conference calls
- Calendar of events (includes upcoming earnings conference call dates and times, as well as planned interaction with research analysts and institutional investors)
- Corporate Governance Information
Contacts
Humana Military Healthcare Services
Julie Ice, 502-301-6982
jice@humana.com
Laid-off workers face health insurance worries
POSTED BY STEVEN WEVODAU
For the second time in two years, Darrow Frazier is without health insurance. In 2006, the 42-year-old Irving man was laid off as a project manager building railroad cars. In August, his employer reassigned him to be a contract employee, which doesn’t include benefits. Mr. Frazier, whose wife is not offered health insurance through her employer, is now nervous. He drives more cautiously, fearful of accidents.
“If my kid needs major surgery because something comes up, what do I do?” asks Mr. Frazier, father of an 8-year-old and a 6-year-old. “I basically go bankrupt.”
The country’s yearlong recession has led to a barrage of job losses – 533,000 in November alone and 1.9 million so far this year, according to the U.S. Department of Labor. For many laid-off workers, it’s the first time they’ve had to confront a forced change to their health care coverage.
What should they do?
The federal government makes health care provisions for laid-off workers through the Consolidated Omnibus Budget Reconciliation Act of 1985, which extends health insurance coverage from your former employer for 18 months.
Keith Peterson, 33, of Dallas was laid off Dec. 9 from a Philadelphia-based drug manufacturer. He passed on COBRA insurance because it would have cost $1,200 a month.
In most cases, COBRA costs just as much as the company’s subsidized insurance plan. But with COBRA, the individual pays the entire premium without the company’s help. It’s normal for monthly COBRA premiums to be more than double what a person paid while employed.
Mr. Peterson’s company-provided health insurance for himself, his wife and 2-year-old daughter runs out Dec. 31.
“I’ve got to figure something out,” he said. “Maybe catastrophic insurance on myself and just something on the wife and little girl.”
He said he’s eyeing a short-term individual policy from Blue Cross Blue Shield that will cost him around $100 a month, but he’s not sure.
But big insurance carriers may not always be best, said Reid Rasmussen, an insurance carrier relations manager with Dallas-based BenefitMall, a resource for employee-benefits brokers.
“Health insurance policies are like different flavors,” Mr. Rasmussen said. “Maybe the biggest company doesn’t have the flavor for your situation.”
Mr. Rasmussen, who also is a member of the Dallas Association of Health Underwriters, recommends finding an insurance broker to help navigate through different options after a layoff.
“That’s what they’re there for,” Mr. Rasmussen said. “Without them, you might end up paying too much, or buying more insurance policy than what you need.”
Options for individuals mostly have been limited to high-deductible plans, short-term policies or traditional co-pay plans. But UnitedHealthcare launched a plan earlier this month with laid-off workers in mind.
The insurer’s UnitedHealth Continuity plan allows members to apply for and lock in health insurance today while they are healthy but not use the coverage until they retire or become self-employed, unemployed or move to a job without benefits.
The plan allows individuals to turn the insurance on or off as their needs change, and they can do it as many times as they want, said Richard A. Collins, chief executive of UnitedHealthcare’s Golden Rule Insurance Co., which offers the plan. When the insurance is inactive, the member pays 20 percent of the premium.
Some health insurance analysts are skeptical.
“Paying a health insurer because you are afraid of becoming uninsurable in the future is like pouring gasoline on a fire and wondering why it hasn’t gone out,” said Thomas J. Garvey, chairman of the Center for Health Care Policy, Research and Analysis in Merrick, N.Y. “This entire concept is ludicrous.”
Other experts have described it as betting against the government’s ability to pass national health care reform, which could eliminate the need for such policies.
It’s one among many examples of how major insurers are working to capitalize on the needs of a growing uninsured population. Aetna Inc., for example, now offers tips on its Web site – www.planforyourhealth.com – for surviving a layoff and securing health insurance.
Aetna even suggests looking at other insurers, such as free and low-cost insurance through Medicaid and the State Children’s Health Insurance Program.
Aetna also offers financial tips for laid-off workers, such as paying off high-interest credit-card debt and cutting unnecessary expenses.
The worst mistake is to do nothing, said Ann Rote, Aetna’s Southwest region general manager of consumer business.
“Make sure your benefits don’t lapse. Somehow, get coverage,” Ms. Rote said. “A lot of people make the mistake of running naked for a few months
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