Archive for January, 2009
Iceland and Greece serve as early warnings
LONDON and NEW YORK, Jan. 28 /PRNewswire-FirstCall/ — 2009 will see the political consequences of the global credit crunch start to have an impact, according to the 16th annual Political Risk Map, launched today by Aon Risk Services, a division of Aon Corporation.(Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO)
In a global webcast, Aon’s political risk and trade credit experts discussed how the economic instability caused by the credit crunch was having a flow-on effect on political stability.
Miles Johnstone, director of Aon’s Political Risk team, explained: “This year’s map reflects how the impact of the credit crunch is shifting from being an economic problem to a political problem. When an economy is in downturn, the government has less resource available to deal with issues when they arise, potentially leading to political instability.
“We are seeing this particularly in several Eastern European countries, as well as Iceland and Greece, where there is a rise in exchange transfer and sovereign non-payment risk as well as an increase in widespread protests and street disturbances.”
The emergence of Very High Risk nations
The past year has seen a number of High Risk countries continue to deteriorate to the point where Aon believes the gap between seven countries — Afghanistan, Congo DRC, Iran, Iraq, North Korea, Somalia and Zimbabwe — and other High Risk countries warranted the creation of a Very High Risk category.
Miles commented: “The level of risk in these countries just continued to get worse. It has reached the point where although we have been able to secure insurance cover for some clients in some of these territories, it is not always available.”
The Commodity Crunch
This year’s map includes a Commodity Crunch Exposure Matrix, which identifies the countries most vulnerable to political instability in 2009 if commodity prices continue to fall, as has been suggested by some forecasters.
“Volatility in global commodity prices in the 1970s and early 1980s contributed to political and economic instability in a number of countries,” according to Roger Schwartz, senior vice president of Aon Trade Credit. “Countries that recently benefited from very high commodity prices may suffer as they fall. The types of commodities we are talking about include oils, metals and minerals.
“Interestingly, the resource nationalism prevalent last year when commodity prices were rising continues, despite the fact prices are now firmly on a downward trend.”
A move to the middle
A reflection of the general rise in the risk level globally, the past year has been notable for a significant shift from the Low Risk category to the Medium-Low category. Six Eastern European countries, Estonia, Hungary, Latvia, Lithuania, Slovakia and Slovenia, as well as Greece and Iceland, received a downgrade.
On the other hand, four High Risk countries, Malawi, Moldova, Syria and Turkmenistan, saw an improvement in their status to Medium-High Risk.
Movements on the 2009 map:
Thirteen countries have been upgraded to a lower risk level: Algeria, Benin, Cameroon, Colombia, Kuwait, Lesotho, Libya, Malawi, Moldova, Morocco, Syria, Tunisia and Turkmenistan.
Eighteen countries have been downgraded to a higher risk level: Afghanistan, Congo DRC, Estonia, Greece, Hungary, Iceland, Iran, Iraq, Latvia, Lithuania, Malaysia, Mauritania, North Korea, Slovakia, Slovenia, Somalia, Thailand and Zimbabwe.
Miles concluded: “It is an uncertain future for many companies and many sectors. Just how some of these issues, such as the commodity crunch, will play out is unclear. We have seen a significant increase in enquiries over the past year from companies seeking political risk cover. It remains to be seen how and to what extent demand for cover is affected by the ongoing impact of the credit crunch on global trade and investment.
“As the global business landscape continues to change, the Political Risk Map provides our clients with the proper analytical tools to assess the various contingencies and determine how they may impact their sustainable growth, continuity and profitability.”
Media Contacts:
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Reuben Aitchison Kelly Drinkwine
+44 (0)20 7086 7201 +1 312 381 2684
reuben.aitchison@aon.co.uk kelly_drinkwine@aon.com
http://aon.mediaroom.com http://aon.mediaroom.com
About the 2009 Political Risk Map
Aon ranked the political risk of 209 countries and territories, measuring risk of currency inconvertibility and transfer; strikes, riots and civil commotion; war; terrorism; sovereign non-payment; political interference; supply chain interruption; legal and regulatory risk. The risk in each country was ranked as Low, Medium-Low, Medium, Medium-High, High or Very High. A country with an “elevated” risk is defined as any country with a risk ranked at Medium-Low, Medium, Medium-High, High or Very High.
The results of the analysis are detailed on the 2009 Political Risk Map, produced by Aon Risk Services in partnership with Oxford Analytica, an international consulting firm. Oxford Analytica draws its analysis from a global network of more than 1,000 experts — including senior faculty members at Oxford University and at major research institutions worldwide — to make independent judgments about geopolitical risk.
The Political Risk Map is published annually by Aon Risk Services, a unit of Aon Corporation. With more than 400 specialists in 60 offices around the world, Aon has been providing political risk and trade credit insurance and consulting services, such as country audits, since 1912. For more information, visit http://www.aon.com/2009politicalmap.
About Aon
Aon Corporation (NYSE: AOC - News) is the leading global provider of risk management services, insurance and reinsurance brokerage, and human capital consulting. Through its more than 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world’s best broker by Euromoney magazine’s 2008 Insurance Survey. In 2008, Aon ranked highest on the Business Insurance ranking of the world’s largest insurance brokers based on commercial retail, wholesale, reinsurance and personal lines brokerage revenues. Aon also was ranked by A.M. Best as the number one insurance broker based on brokerage revenues in 2007 and 2008, and was voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 and 2008 by the readers of Business Insurance. Sign up to receive Aon news alerts by email or RSS feed at: http://aon.mediaroom.com/index.php?s=58.
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Aon Limited is authorised and regulated by the Financial Services Authority in respect of insurance mediation activities only.
Source: Aon Corporation
Tags: Aon Corporation, Steve Wevodau Aon Corporation, Steven Wevodau Aon Corporation
Posted by Steven Wevodau
By Barry B. Burr
Posted: January 26, 2009, 12:01 AM ET
A new index quantifying how well corporations manage risks associated with their defined benefit plans shows executives appear to be taking an overly narrow view of risks to which their plans are exposed.
MetLife Inc.’s new U.S. Pension Risk Behavior Index found plan officials tend to focus most on a few investment-driven risks — such as asset allocation, return goals, underfunding of liabilities and mismatch of assets and liabilities — more than addressing a full range of relevant risks. The latter encompasses liability management, including risks like longevity risk and early-retirement risk.
But in some instances, the index research revealed, pension executives were not addressing adequately even risk they rank among the most important.
The Pension Risk Behavior Index was calculated with an initial value of 76. The index’s scale runs from zero to 100, the highest number representing pension executives reporting high success in addressing all risks they consider as important.
Putting the index’s 76 value in perspective, Cynthia Mallett, vice president-product and market strategies in MetLife’s institutional business, who oversaw development of the index, said: “If every pension sponsor at a minimum agreed to address the risk items they thought were important, you’d arrive at a PRBI of 75.” So the index value reflected a slightly better achievement of that minimal rate.
“Our objective is to develop a baseline for risk management for defined benefit plans,” Ms. Mallett said. MetLife officials plan to use the index as a benchmark to measure executives’ perceptions of risks affecting their plans and their success at managing those risks. They plan to update the index annually, releasing it every January.
To derive the index’s value, MetLife enlisted Greenwich Associates to survey 168 corporate executives, interviewing executives responsible for pension investment, risk management or employee benefits, as well as senior management. Of the sponsors, 73 had defined benefit assets greater than $1 billion and 39 between $500 million and $1 billion.
The interviews were conducted between last June and August before the market meltdown began in the fall. The index is based on 153 sponsors, who completed the entire set of questions for the survey.
The executives were asked to address 18 risk factors, identified by MetLife, Bdellium Inc., Pension Governance Inc., Greenwich and other industry experts.
“None of the conventional wisdom played out here,” said Ms. Mallett.
“You’d expect plan size, balance sheet, industry to be markers that drive differences. We expected to find it and looked for it and we didn’t find it.” The survey found no common trend.
Defined benefit plans largely have been managed from “an asset-centric” point of view for the last 20 or 30 years, Ms. Mallett said. “There is an emerging sense old measures don’t work anymore.”
18 risk factors ranked; asset allocation tops the list
In the survey, executives first were asked to rank the 18 risk factors they perceive as “most important” in affecting their pension plans. Asset allocation was ranked most important risk by 54% of respondents, the highest percentage. It was followed by meeting return goals, 49%; underfunding liabilities, 47%; asset and liability mismatch, 43%; accounting impact, 36%; liability management, 30%; ability to measure risk, 29%; negative alpha, 27%; plan governance, 26%; fiduciary risk and litigation exposure, 25%; investment valuation, 21%; decision-process quality, 18%; adviser risk, 15%; inappropriate trading, 10%; quality of participant data, 6%; longevity risk, also 6%; mortality risk, 5%; and early retirement risk, 2%.
The executives then were asked to rate themselves at their success at managing the risk factors they selected as the most important. Of the responses, 44% of the sponsors were “very successful” in managing risks; 31% were somewhat successful; 16% neither successful nor unsuccessful; 6% somewhat unsuccessful; and 3% very unsuccessful or failed.
Respondents tended to choose risk factors that often were most important in terms of public disclosure of numbers and most measurable, the report noted.
For some of the selected risk factors — such as adviser risk and investment valuation risk — Ms. Mallett said MetLife researchers were surprised by the relatively low priority. “It didn’t seem to vary with the size of the plan,” she said.
Also, “the level of funded status didn’t correlate with how successful risk management was,” she said.
“As a plan goes through its lifecycle, different risk factors might be more important at some times than others,” Ms. Mallett said. “It is hard to argue any one risk should be disregarded” at any stage of a plan’s maturity. “The majority of plan sponsors are pretty narrow” in the risk they see as important.
“This index reflects we are in a changing environment, where other factors are coming into play,” Ms. Mallett said.
Keith P. Ambachtsheer, director of the Rotman International Centre for Pension Management, University of Toronto, and president of KPA Advisory Services Ltd., Toronto, said he is surprised by the results.
Mr. Ambachtsheer, who was unaware of the index and informed of the results generally, said, “asset-liability mismatch is the primary risk in most DB plans. Asset allocation by itself is a non-starter. The obvious primary risk factor, asset-liability mismatch ranked fourth? That’s a surprise.”
“I think they (the index) miss what is important in managing risk,” he said.
“It’s all about choosing what level of mismatch risk management wants on (the corporate) balance sheet,” he added.
He said the study would need empirical validation to confirm its findings.
Contact Barry B. Burr at bburr@pionline.com
Tags: Benefits News, Steve Wevodau Benefits News, Steven Wevodau Benefits News
The Hartfords Gregory Boyko, speaking before the Asia Society, links physical health and fiscal health as millions of people prepare for retirement
NEW YORK–(BUSINESS WIRE)–The world’s expanding obesity epidemic has long-term implications for millions of overweight people around the globe who face higher costs for health care in retirement as they experience increased incidence of diabetes, heart disease and cancer, according to a senior executive with The Hartford Financial Services Group, Inc. (NYSE:
HIG -
News).“The simple truth is, while more than half of the world’s population are crying out in hunger, 1.6 billion people are eating themselves to death,” said Gregory Boyko, chairman of Hartford Life Insurance K.K., The Hartford’s Japan subsidiary. The obesity epidemic is a worldwide concern as the International Diabetes Federation (IDF) reports that obese and overweight citizens now make up between half and two-thirds of the population in the United States, Europe, Australia and developing countries such as Mexico, Egypt and South Africa.
Boyko spoke Monday evening before an international group of corporate and government executives at the Asia Society in New York City. He called for private-public partnerships to better educate populations about the need for retirement preparedness, including the need for people to accumulate more assets for their own financial security as well as the need to maintain good health well into old age.
Global research from The Hartford shows the No. 1 financial concern in retirement for people age 45 and older is keeping up with daily expenses for food, shelter and other basic needs such as health care. The survey also showed that 87 percent of people in Japan were somewhat to extremely concerned about having enough money in retirement compared to 79 percent in the U.S. and 65 percent in the United Kingdom.
“Increasingly, people around the world are realizing they will need to be responsible for their own long-term financial security by saving and investing more for retirement,” Boyko said. “Unfortunately obesity makes it more difficult to achieve financial security in retirement because it increases expenses and reduces the amount of savings available for retirement.”
People who are obese –- considered to be anyone whose body weight is 20 percent or more above their ideal weight based upon height, age, gender and build, or who has a Body Mass Index (BMI) of 30 and above — face greater risks of heart attacks, certain cancers and strokes, according to Carol Harnett, vice president and national practice leader for The Hartford’s Group Benefits Division. Those risks have real costs attached to them, especially as people age, she said.
Even with health insurance, obese adults in the U.S. pay 32 percent more in health care costs than people of average weight pay, according to the Yale University Rudd Center for Food Policy and Obesity.
Losing weight and improving overall fitness can reduce retirement costs, lengthen lives and improve overall quality of life, Boyko pointed out. Around the globe, government health organizations have identified four key factors that can make a significant difference in improving health: avoiding smoking, eating at least five helpings of fruit and vegetables daily, exercising moderately for at least 30 minutes five days a week, and maintaining a BMI of less than 25. The British Medical Journal reports that making even just one of these positive changes can increase someone’s life expectancy by more than 20 percent during a 14-year period.
Japan, with a population widely recognized as one of the leanest and healthiest in the world, is taking the obesity epidemic head on as its population ages and public health care costs skyrocket, Boyko reported. A law enacted in 2008 aims to reduce the number of obese people by 10 percent by 2012 and by 25 percent by 2015. Employers and local governments whose employees fail to meet specific targets will face financial penalties. People between the ages of 40 and 74 (56 million) must meet specific waistline standards, 33.5 inches for men and 35.4 inches for women.
“Having lived and worked in Japan for years, I can tell you that few populations on earth are as fit and lean as the Japanese,” Boyko said. “Japan’s government has decided that curbing expanding waistlines will rein in a rapidly aging society’s ballooning health care costs, one of the most serious and politically delicate problems facing Japan today.
“Because Japan’s population is generally older than many countries, they are experiencing many issues today that we will experience 10 and 20 years from now,” Boyko added. “The lesson is that we need to simultaneously fatten our wallets for retirement while we slim our waistlines and prepare for a long and hopefully fulfilling retirement.”
About The Hartford
The Hartford, a Fortune 100 company, is one of the nation’s largest diversified financial services companies, with 2007 revenues of $25.9 billion. The Hartford is a leading provider of investment products, life insurance and group benefits; automobile and homeowners products; and business property and casualty insurance. International operations are located in Japan, the United Kingdom, Canada, Brazil and Ireland. The Hartford’s Internet address is www.thehartford.com.
HIG-L
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2007 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.
Contact:
The Hartford
David Potter, 860-843-8993
david.potter@hartfordlife.com
or
Timothy Benedict, 860-843-5150
timothy.benedict@hartfordlife.com
Source: The Hartford
Tags: Steve Wevodau The Hartford, Steven Wevodau The Hartford, The Hartford
COLUMBUS, Ga., Jan. 26 /PRNewswire-FirstCall/ — Aflac Incorporated (NYSE:
AFL -
News) announced today that it will release fourth quarter financial results after the market closes on February 2, 2009.In conjunction with the earnings release, Aflac Incorporated will webcast an analyst meeting on Tuesday, February 3, 2009. During the meeting, Aflac Incorporated Chairman and CEO Daniel P. Amos will discuss Aflac’s fourth quarter and year-end results. Following Mr. Amos’ comments, Senior Vice President of Investor Relations Kenneth S. Janke Jr. will review the company’s financial results. Other members of management will also be available for comment, including Aflac Incorporated President and CFO Kriss Cloninger III, President of Aflac and COO of Aflac U.S. Paul S. Amos II, and Aflac Incorporated Senior Vice President; Chief Investment Officer Jerry Jeffery.
The evening presentation on Tuesday, February 3, will be available via webcast starting at 6:40 p.m. To hear the webcast, visit aflac.com and click on the Investors page. Registration is required, so please allow five to seven minutes to sign up prior to the scheduled start time.
For more than 50 years, Aflac products have given policyholders the opportunity to direct cash where it is needed most when a life-interrupting medical event causes financial challenges. Aflac is the number one provider of guaranteed-renewable insurance in the United States and the number one insurance company in terms of individual insurance policies in force in Japan. Our insurance products provide protection to more than 40 million people worldwide. Aflac has been included in Fortune magazine’s list of America’s Most Admired Companies for seven years and in Fortune magazine’s list of the 100 Best Companies to Work For in America for eleven consecutive years. Aflac has been recognized three times by both Fortune magazine’s list of the Top 50 Employers for Minorities and Working Mother magazine’s list of the 100 Best Companies for Working Mothers and has also been included in Ethisphere magazine’s list of the World’s Most Ethical Companies for two consecutive years. Aflac Incorporated is a Fortune 500 company listed on the New York Stock Exchange under the symbol AFL. To find out more about Aflac, visit aflac.com.
(Logo: http://www.newscom.com/cgi-bin/prnh/20041202/CLTH019LOGO )
Analyst and investor contact - Kenneth S. Janke Jr., 800.235.2667 - option 3, FAX: 706.324.6330, or kjanke@aflac.com
Media contact - Laura Kane, 706.596.3493, FAX: 706.320.2288, or lkane@aflac.com
Source: Aflac Incorporated
Tags: Aflac Incorporated, Steve Wevodau Aflac Incorporated, Steven Wevodau Aflac Incorporated
Posted by Steven Wevodau
By Bob O’Brien
IN THE HE-SAID, SHE SAID WITH RATING AGENCY, SKEPTICS WIN
The latest chapter in the pitched battle over the exposure that Aflac (AFL) has to some of the hybid securities generated by the ailing European banking community, the skeptics would appear to be carrying the day.
Aflac shares plunged 37% in one trading session last week on concerns about the concentration of some of the hybrid securities in the supplemental insurance concern’s investment portfolio, which included some $8 billion in the securities. However, the stock cut its losses nearly in half late last week after company management did a compelling job of defending its balance sheet and its business model. That recovery, however, ran aground after S&P surprised company management with a downgrade of its financials, citing the investment exposure.
The stock has taken an especially-hard drubbing in Monday’s trading, falling 5% to sink to a fresh low. Investors are concerned that the company could face some additional risks if its credit takes another bruising from the ratings agencies – something that S&P refused to take off the table – because the insurer’s reputation could suffer in Japan, where it does a big chunk of business, and where investors have traditionally been more risk-averse than here in the States.
Tags: Health Insurance News, Steve Wevodau Health Insurance News, Steven Wevodau Health Insurance News
JACKSONVILLE, Fla.–(BUSINESS WIRE)–FPIC Insurance Group, Inc. (the “Company”) (Nasdaq:
FPIC -
News) announced today that John R. Byers, President and Chief Executive Officer, and Charles Divita, III, Chief Financial Officer, will present at the New York Society of Security Analysts (NYSSA) 13
th Annual Insurance Conference in New York City on Tuesday, February 10, 2009 at 10:10 a.m., Eastern Time. The conference is being held at the offices of the NYSSA at 1177 Avenue of the Americas, 2
nd floor. Additional information regarding this conference can be found on NYSSA’s website at
http://www.nyssa.org.The event will be webcast live on the Internet via the Company’s corporate website at
http://www.fpic.com. To access the webcast from the Company’s homepage, click on “Investor Relations” where a link will be provided to connect listeners to the webcast. The slide presentation used by the Company will be available as part of the webcast. For those unable to listen to the live webcast, an archived edition along with the slide presentation will be available beginning at 3:00 p.m., Eastern Time, Tuesday, February 10, 2009 on the Company’s website within the Investor Relations page. The archived edition of the webcast will be available for one year.
An archived audio webcast will also be available to NYSSA members at no charge on NYSSA’s website at http://www.nyssa.org beginning Tuesday, February 17, 2009.
FPIC Insurance Group, Inc., through its subsidiary companies, is a leading provider of medical professional liability insurance for physicians, dentists and other healthcare providers.
Contact:
FPIC Insurance Group, Inc., Jacksonville
Investor Relations
Dana Mullins, 904-360-3612
Source: FPIC Insurance Group, Inc.
Tags: FPIC Insurance Group, Steve Wevodau FPIC Insurance Group, Steven Wevodau FPIC Insurance Group
Options do exist for those facing worries about insurance, but drawbacks are many
By Jason Roberson
The Dallas Morning News
Tucson, Arizona | Published: 01.26.2009
DALLAS — For the second time in two years, Darrow Frazier is without health insurance.
In 2006, the 42-year-old Irving, Texas, 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. 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 Frazier, father of an 6-year-old and a 8-year-old. “I basically go bankrupt.”
The country’s yearlong recession has led to a barrage of job losses. 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.
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.
But big insurance carriers may not always be best option, 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,” Rasmussen said. “Maybe the biggest company doesn’t have the flavor for your situation.”
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.
Options for individuals mostly have been limited to high-deductible plans, short-term policies or conventional co-payment plans. But UnitedHealthcare launched a plan in December 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 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 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 legislation, 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, offers tips on its Web site — www.planforyourhealth.com — for surviving a layoff and securing health insurance.
Tags: Steve Wevodau UnitedHealthcare, Steven Wevodau UnitedHealthcare, UnitedHealthcare
Two leading reformers debate the role of private insurers.
Steffie Woolhandler and Richard Kirsch talk it out.
‘The reason healthcare in this country costs so much more than in any other country is because we’re the only country that treats healthcare as a commodity.’
The numbers have never been this grim. Almost 50 million Americans are uninsured. The average annual premium for a family is nearing $13,000, and racing upward at rates that wages can’t hope to match. If nothing changes, by 2050, government healthcare spending will consume 37 percent of the gross domestic product, and private health spending will be far more. There will be little left for education or wages or leisure.
Economists have a dictum they call Stein’s Law, and it is simple: If something cannot go on forever, they say, it won’t.
Our health system cannot go on in this fashion forever. It will break the back of the federal budget and crush individual consumers. But between “cannot” and “will not” lies an ocean of impediments and questions.
Some of those barriers seem to be dissolving before the moral force of the issue. For the last eight years, our government lacked either the will or the interest to act on health reform. After Jan. 20, 2009, that will no longer be true.
President-elect Barack Obama has not only stated his intention to reform healthcare, he has also staffed his administration with eager reformers, notably former Senate Majority Leader Tom Daschle, who has written a book calling for comprehensive healthcare reform and who will serve as the administration’s “health czar,” as well as its Health and Human Services secretary.
But if the incoming administration has the will, few are sure of the way. It’s an old debate, and a consequential one. As the saying goes, the status quo is everyone’s second choice. And when you have reformers squabbling over what they want, and industry uniting to defeat what they don’t want, the outcome is never progressive.
In an attempt to encourage dialogue in advance of the legislative battles to come, In These Times invited representatives from two leading reform groups—Steffie Woolhandler, co-director of Physicians for a National Health Program, and Richard Kirsch, the national campaign manager for Health Care for America Now (HCAN)—to talk out their differences. An edited transcript of their conversation follows.
Why don’t we begin with each of you giving us the “elevator pitch” of what your groups are advocating for? Steffie?
Steffie Woolhandler: Our group of more than 15,000 physicians supports single-payer national healthcare insurance. We support that because it’s the only way to affordably cover all Americans. That’s because single-payer allows you to generate huge administrative savings by going to a more simplified payment structure.
If you don’t go with single-payer and you continue with the current system of multiple-payers and the participation of private insurance, you continue to have tremendous administrative waste. And then the only way to get more coverage is to spend more money, and that quickly becomes economically unfeasible.
Just so we’re clear on terms, when you say “single payer,” how stringent are you being? Are you talking just what Canada and England do, or are you also considering Germany and France, which have nonprofit involvement? Do they count as single-payer?
SW: Germany clearly would not count as single-payer. They have multiple payers. But there are other nations that have, or have had, some form of single-payer systems, not just Canada or England. For a while, Australia had single-payer, for instance, and Taiwan has a single-payer system.
Richard?
Richard Kirsch:
Health Care for America Now’s goal is to have a guarantee of quality, affordable healthcare for everyone in the nation. And we’ve come together as a coalition that includes 480 organizations that represent community groups, labor, healthcare providers and faith-based groups, among a whole variety of organizations on a common set of principles: That everyone should be covered. That the coverage should be affordable based on people’s income. That the benefits should meet people’s needs. That the coverage should be affordable to employers. And that, in order to do this, we need to have really strict regulation of the private health insurance industry, so that it can’t continue to have a business model that drops people when they need healthcare.
We also need to give people a choice of healthcare coverage. So, in addition to keeping their own healthcare coverage, they have the choice of a public health insurance plan. Private insurance isn’t the only choice. The primary goal is to look at healthcare as a public good.
The reason healthcare in this country costs so much more than in any other country is because we’re the only country that treats healthcare as a commodity.
Your opening statements demonstrate a congruency in values, but obviously your approaches are different. It seems to me you each balance the politics and the policies of the issue differently. So, let me start with you, Steffie: How does single payer pass the Senate Finance Committee?
SW: Well, you build a popular movement among the American people, much in the way that Obama was able to succeed by building a popular movement. If you’d asked me five years ago, what was more likely, passing single-payer or electing a black president, I probably would’ve said single-payer and you probably would’ve, too. But the thing that changed was a kind of populist sentiment in this country, and that’s what it’s going to take.
So, Richard, what’s your response? In particular, why do you let corporate insurers remain in your system?
RK:
First of all, our goal is to get all folks covered. A lot of people in America have their healthcare taken care of by private insurers.
My wife’s a cancer survivor. She got really good care and some not-good care, and none of that had to do with the insurance. The not-good care had to do with a doctor who wasn’t so good, but the insurance covered both the good doctor and the bad doctor.
There are a lot of problems with the health insurance industry and the way it functions, but it can be regulated. It’s not private insurance that makes it impossible to provide access to care to people. We should remember that, even with all the frustrations that people have with it.
SW:
These private-public types of plans fail. The TennCare plan [Tennessee’s Medicaid managed care program] in 1992 did include a big public plan, so it’s not correct to say that none of these efforts have included a public plan.
Similarly, the Massachusetts reform in 1988, the Oregon reform in 1992, and the Washington reform in 1993 all included substantial employer mandates. They were never fully implemented because the economics didn’t work. If you don’t get the administrative costs under control, you can’t get advanced care.
But these proposals fail at the state level because healthcare is a countercyclical cost. States cannot deficit spend. When recessions hit, their revenues drop. But when recessions hit, more people lose their insurance and need subsidies. So at the exact moment revenues go down, costs go up. That’s why the plans unravel. But it’s not necessarily applicable to the federal level.SW: That’s certainly true about the state level and the inability of states to deficit spend. But what the countercyclical argument doesn’t get to is the explosion of healthcare costs. And that is much more the cause of their failure, and not a specific issue about money flowing into state coffers.
RK: As Steffie may recall, I was a leader of the single-payer movement in the early ’90s. I actually co-wrote with Assemblyman Dick Gottfried—who was, and still is, the chair of the Assembly Health Committee in New York—the only fully financed single-payer bill to pass a state legislative body. (Most of the other ones that passed punted on the financing.)
I did the fiscal analysis that showed the financing. So I understand the arguments against state plans. But there is an enormous difference if we do this at the federal level. You have broad-based taxes, you can deficit spend. The financing is totally different.
Richard, one of the arguments that Steffie is making about your proposal is that of cost-control. I’m not as concerned about the administrative costs as she is, but single-payer certainly has a very coherent argument about cost-control. It’s essentially that we will use the market share of a single payer to force the system into being more cost-effective. There’s a lot of research backing this up. What is the cost-control theory of the HCAN plan?
RK:
There are two things: First, having a public plan that has 100 million people in it will give you a lot of the cost-control.But what if you don’t have that? That seems to me a very speculative part of your plan. Are there any other aspects of the plan that will control costs?
RK:
Well, to say that the public plan is speculative is to say that any of this stuff is speculative, regulating the insurance industry, etc. But there are other things that control costs that might even be bigger lifts than the public plan.
We need to ask, “How do we start doing the other kind of changes in the system that we need, to control costs?” Part of it is, obviously, how do we get everybody in the system with prevention? How do we get better chronic care management? How do you create a system where providers have different incentives? How do you have a system where there’s better value?
So, yes, let’s use the public plan for its ability to have better prices for drug companies, better prices for hospitals, not have medical specialists get paid the outrageous amounts of money that they do get paid in this country—all the things Medicare tries to do.
But also, let’s start having a public discussion about the really hard decisions about what we pay for. Should we be having doctors perform lots of services that have no value? Should we be paying for drugs that have no value? Those are the hard decisions that the hospitals, the doctors, the drug companies, the medical device manufacturers are going to fight tooth and nail in both a private system and in a public system, and that’s ultimately where the price savings are going to have to come from.
Steffie, let me ask you about what is maybe the most fundamental disagreement between you two. Do you think the American people might be disturbed to lose the private healthcare they currently have and move toward a government system?SW: Medicare is one of the most popular social programs of all time in the United States. So it’s very easy to talk in terms of Medicare, and to win people over by explaining that what we are proposing is an expanded and improved Medicare for all. Winning people over is not he problem.
Certainly, if Richard and HCAN went out with rhetoric about Medicare, they’d have no trouble signing up voters who are interested in it. But if they go out there with, “Here’s our principle: We have to have private insurance,” that’s not going to move us forward.
Okay, but to follow up: HCAN, for better or for worse, is a response to a long history of failure on the U.S. left to achieve universal healthcare. And that’s been a failure to achieve it on a single-payer basis, which is what Truman was looking at, a failure on a hybrid basis, which is more what Clinton was looking at. I agree that HCAN is a policy compromise that is suboptimal, but it does have a certain political logic behind it.
SW: Who got Obama elected? That’s obviously not the same coalition that we’d need to build a movement for national health insurance, but it shows what is possible. We’ve had a civil rights movement that completely changed the way we think about race. We’ve had a women’s movement that has won all sorts of victories. We had an antiwar movement that ended the war in Vietnam. So I don’t understand your cynicism here about how there couldn’t be a movement.
I’m not saying that there can’t be one, but I’m wondering why hasn’t there been one? The catalytic figure for the movement of Barack Obama was Barack Obama. What would be the catalytic moment or figure for your movement? Single-payer as an idea has been around for an extremely long time, but the movement hasn’t achieved a sufficient amount of power to pass it. So what has been wrong in the past that will be right in the future? Why can it succeed now when it has failed before?SW: Right before the Clinton plan, the thing that changed was the election of Sen. Harris Wofford (D-Pa.). He was elected on a single-payer platform almost by accident. It was only one aspect of his plan, and then his opponent, Dick Thornburgh, decided to attack him as being a single-payer supporter, and Wofford was elected to the Senate based on Thornburgh’s attacks.
Now, that I could not have predicted. But in a general way, I can predict that when important elections are won and lost on this issue, then it’ll be like a lightning bolt coming from the sky. The political scene can change very, very rapidly.
RK: But Steffie, what you just said totally makes an HCAN point. Because Barack Obama was elected on a promise to fix healthcare in a certain way. One of his ads showed two extremes—government health insurance at one extreme, all private health insurance at the other extreme—and he said, “I’m not at either extreme, I’m in the middle.” What he said in his messaging at every debate was, “Under my plan, you can keep your own health insurance or you can have a choice of other health insurance.” He was elected on exactly the kind of mandate Steffie’s talking about.
That’s what the election was all about. It wasn’t for single-payer. It was for this bold promise to the American public to have a guarantee of quality, affordable healthcare from a choice of either private or public insurance and know that you’re going to get good benefits that are affordable. That’s the mandate we have.
Steffie, is there any intermediate proposal between here and single-payer that would be a step in the right direction?SW: If you’re going to do something incremental, I would start with single-payer for hospital care. All hospitals would get their budget from a single-payer, and hospitals would no longer send bills or do health accounting to individual patients, but would be budgeted. That at least gets you a substantial amount of administrative savings and increases the fairness of the system. It also allows you to do better health planning.
There’s not a lot of talk about that as an incremental step, but that’s the one incremental step that makes sense.
Richard, a lot of what you said today has been reliant on the idea of the public plan, but my congressional reporting suggests that one plausible outcome for your plan is that when you try to get to 60 votes in the Senate, the public plan gets bargained away. Is the public plan a bottom line? If the public plan vanishes, but the rest of the plan is structurally similar to your principles, is that a plan that’s beneath the level of acceptability? Is that a plan that therefore merits opposition?RK: We haven’t as a coalition had a discussion yet about how we look at this whole plan when it passes, and what’s acceptable and what is not.
We’re a long way policy-wise and politically—although maybe not that long on the calendar, potentially only nine or so months—of seeing something enacted. But we’re not there yet, so we’re just going to fight in every way for the best system that is achievable.
We’re glad we got President-elect Obama and more than half the newly elected members of Congress to sign our principles. Our goal is to build this movement for the set of principles that are achievable and that the President-elect got a mandate for, and to see that in law in 2009.
Tags: Health Insurance News, Steve Wevodau Health Insurance News, Steven Wevodau Health Insurance News
Absence of federal rules leaves buyers confused
By JEAN MIKLE
STAFF WRITER
When Claudio “Claude” M. Assini purchased his long-term care insurance policy in 2001, he thought he was taking a prudent step to protect himself and his family from future medical costs.
That’s until the insurance company wanted to boost his rate by 11 percent.
Assini paid about $3,600 a year, which has cost him nearly $30,000 in premiums since 2001. Faced with the rate increase, Assini canceled his policy, fearing that there would be even more increases to come.
The money he spent to protect himself and his wife, Joanne, has now been lost.
“I didn’t want to be a burden on the system,” said Assini, 69, of Stafford. “You try to do the right thing, and look what happens.”
Assini is one of a growing number of policyholders in the nation who are being hit by a round of double-digit increases, making it harder for them to keep the insurance they need to protect their assets.
MetLife announced recently that it would raise premiums an average of 18 percent for those who were under 70 when they bought their policies between 1998 and 2005. John Hancock announced double-digit increases for several types of policies in the spring.
Assini’s policy from Genworth Financial was purchased in New Jersey but issued from its office in Alabama — beyond the purview of New Jersey regulators.
In its rate increase letter to Assini, Genworth said New Jersey regulators were informed of the boost. Assini complained to New Jersey, and regulators here said no rate increase ever came before them.
But the point was moot, regulators said in a letter to Assini; Genworth doesn’t need New Jersey’s permission to raise rates.
Only policies issued in New Jersey are covered by the department’s rules and regulations, leaving policyholders like Assini out in the cold.
“New Jersey hasn’t protected me, and Alabama hasn’t protected me,” Assini said. “The reason why I canceled it is, if you look at all the facts, you say, “These people are going to kill me, if they keep jumping the rates up every three to four years.’ ”
Assini’s experience with long-term care insurance is not unusual, according to Marilyn Askin, an elder law attorney who is chief legislative advocate for the New Jersey chapter of AARP.
Askin and other experts said insurance policies that cover long-term care are often difficult for consumers to understand. Regulation of long-term care insurance has been left to individual states, creating a hodge-podge of laws and requirements for insurers that vary widely across state lines.
Even those who strongly advocate the purchase of long-term care insurance admit that shopping for a policy can be bewildering for consumers.
“There is no national legislation; every state has its own, and the national government has said, “There is no need for that,’ ” Askin said.
Askin compared the situation to that of Medicare Part B supplemental insurance, which was eventually regulated by the federal government after numerous complaints that some consumers had been sold several policies that all essentially provided the same type of coverage.
Insurer complaints
New Jersey has adopted long-term care regulations promulgated by the National Association of Insurance Commissioners, which assists state insurance regulators.
These include a wide range of consumer protections, such as disclosure of past rate increases at the time a policy is purchased, a requirement that purchasers have the opportunity to buy policies that include protection against inflation, and restrictions on future rate rises.
But these regulations only apply to policies issued in this state, according to Marshall McKnight, spokesman from the state Department of Banking and Insurance.
McKnight said the department has investigated and closed 227 complaints regarding long-term care insurance since 2003 without finding any violations that required administrative action. He said the department continues to add information to its Web site and believes in “transparency” when it comes to administrative actions and violations.
But with about 100 different companies selling long-term care policies in New Jersey, “it’s a jungle” for consumers shopping for coverage, Askin said. Many longtime policyholders are now seeing their premiums rise substantially, she said.
“People who bought it when they were younger were under the impression that their premiums would never increase,” Askin said. “That was 10 or 11 years ago, and the insurance industry was pricing them very low, and very few people were actually using the insurance.”
Now, Askin said, as more people file claims, some insurance companies are raising premiums to compensate for increased costs.
In 2007, insurers paid $3.5 billion in benefits to 180,000 Americans with long-term care insurance, according to the American Association for Long-Term Care Insurance, an industry trade group located in Westlake Village, Calif.
“Their pricing was not based on actual experience,” Askin said.
Genworth is just one of the long-term care insurers that has announced hefty premium increases within the last year.
Genworth spokeswoman Yokima Cureton pointed out that this was the first premium increase in long-term care since the company began selling such insurance 30 years ago.
“We don’t just increase premiums,” Cureton said. “We have to gain approval from state regulators.”
Cureton said that when Genworth and other companies began selling long-term care policies, they overestimated the “lapse rate,” or the number of policyholders who would cancel their insurance over time. Few canceled, which means more people filed claims — and increased the companies’ costs.
“We know that people need this insurance,” she said. “We wanted to work with people to make sure no one was unduly penalized.”
Cureton noted that Genworth had worked with policyholders and given them the choice to keep their policies at the lower premium in exchange for some reductions in coverage.
Long-term care is not cheap.
The National Association of Insurance Commissioners estimates that such insurance policies cost an average of $888 annually at age 50, $1,850 a year at age 65, and $5,880 at age 75.
But with the average cost of a semiprivate room in a New Jersey nursing home at more than $90,000 a year, a good policy could be a bargain, advocates for long-term care insurance argue. About 10 million Americans have long-term care insurance, and that number has been growing steadily in recent years.
“If you have the means to pay for care, that’s going to put you in the front of the line,” said Beth Ludden, senior vice president of Long-Term Care Product Development for Genworth. “Many people may have thought they were wealthy enough to self-insure, but with the state of the economy the way it is now, their portfolio has likely taken a significant hit, and it may be more difficult to pay for it now.”
Assini said he feels as though there is not enough oversight of long-term care insurers and policies.
“We have a guy with a mask and a gun, and there is no sheriff to watch him,” Assini said. “Every other insurance policy that I ever heard of has to have the state of New Jersey give its official blessing.”
Limited coverage
Middletown resident Marjorie Bertrand is another critic of long-term care insurance. Her 85-year-old father, Aldo Hofmeister, holds a long-term care policy through Genworth Financial.
Hofmeister purchased the policy about 12 years ago but did not pay for a more expensive inflation rider that would have kept pace with the rising costs of nursing home or assisted-living care.
Hofmeister’s policy only covers $80 a day for nursing home care and $62 for care in an assisted-living facility. In the northern and central New Jersey area, daily rates at assisted-living facilities averaged $148 in 2008, while nursing homes average $264, according to an annual report issued by Genworth Financial.
“Health care has just increased so much that the daily rate he paid for or agreed to, they thought was sufficient, now does not come close to covering the costs,” Bertrand said.
She and her husband now care for their father at home and send him to an adult day care facility during the day.
“My husband and I explored getting it before realizing it is a waste of money unless you get the inflation rider, which makes the premiums unpayable,” Bertrand said.
Some experts argue that it is unreasonable to expect long-term care premiums not to increase, because other types of insurance, such as homeowners or automobile policies, rise regularly.
“Your automobile insurance premium is going to go up, your homeowners insurance premium is going to go up, your medical insurance is going to go up,” said Burton “Tom” Beam, associate professor of insurance at The American College in Bryn Mawr, Pa. “The concept of premiums going up for any reason is not unusual.”
But Beam also argues that long-term care insurance is just one of several methods that can be used to pay for health care as the population ages. Family members could provide some care, and a person’s assets can be used to pay for additional services, Beam said.
Those with limited assets can turn to Medicaid, he said. Some experts question the viability of Medicaid over the long term, and note that Medicaid pays almost exclusively for nursing home care, and not more popular alternatives, such as assisted living or home health care.
“It’s one financing mechanism, but it’s not the only one,” Beam said of long-term care insurance.
Additional Facts
Tags: Genworth Financial, Long Term Care, Steve Wevodau Long Term Care, Steven Wevodau Long Term Care
Posted by Steven Wevodau
Atlanta Business Chronicle
Three Georgia companies have made Fortune magazine’s Top 100 Best Companies to Work For — Aflac Inc., Alston & Bird LLP and Children’s Healthcare of Atlanta.
Columbus, Ga.-based insurance company Aflac (NYSE: AFL) ranked 26th, had job growth of 1 percent last year for a total of 4,493 employees, and had $15.4 billion in revenue in 2007 according to the magazine.
“Insurer is provider of the largest onsite corporate day care in the state of Georgia,” Fortune said. “Aflac’s two centers care for 520 children at a modest average cost of $352 a month. Hours were extended to 11:30 p.m. so second-shift workers could use the benefit too.”
Atlanta law firm Alston & Bird placed 36th, had 7 percent job growth for a total of 1,718 employees and $518 million in revenue in 2007.
“This 115-year-old law firm is heaven for parents: three months’ paid leave for new moms, adoption benefits up to $7,000, special parking for pregnant moms, onsite child care, and a ‘maternity closet’ to recycle clothing,” Fortune noted.
Children’s Healthcare of Atlanta came in at 67 on the list, with job growth of 8 percent for 5,850 employees and $1.4 billion in revenue in 2007.
“Pediatric hospital tackled nurse shortage with 100 Nurses in 100 Days campaign, with prizes for referrals: 100 tanks of gas, 100 hours of babysitting, a 100-mile getaway to a Ritz-Carlton hotel,” Fortune said.
Tags: Alston & Bird, Children's Healthcare of Atlanta, Steve Wevodau Alston & Bird, Steve Wevodau Children's Healthcare of Atlanta, Steven Wevodau Alston & Bird, Steven Wevodau Children's Healthcare of Atlanta