Daily Insurance Report, Walt Bernard Podgurski,  Editor,  440-773-1108, 
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Editorial Mission Statement: The goal of this publication is to provide readers a broad selection of what is being written about the insurance industry and related issues. Some articles have a “tilt” towards a particular perspective one way or another. Inclusion in this newsletter is not an endorsement of any views or content; but report the various and differing views appearing in media.
  Friday, 04/20/18

Health care will cost $280,000 in retirement — and that doesn’t include this huge expense
The cost of health care for a 65-year-old American couple retiring this year rose to $280,000 — a mere 2% if that’s any comfort — but that’s no reason for a sigh of relief. The figure doesn’t include long-term care costs, and it’s going to go up every year for the foreseeable future, experts said.
The estimate, calculated by Fidelity Investments, has jumped 75% since the company’s first estimate in 2002 (then $160,000). The figure includes life expectancies for the couple, and also includes Medicare coverage and copays, vision, over-the-counter medications and dentures.
Without much doubt, the cost of health care in retirement will continue to rise, said Hope Manion, senior vice president and health actuary at Fidelity Investments Benefits Consulting. “Things will still continue to increase and sometimes steeply, particularly as new treatments come to market and new drugs come to market and they’re effective,” she said. For example, the estimate jumped 6% between 2016 and 2017, Fidelity said.
But there’s one thing these numbers do not include: long-term care cost, which is “extremely expensive” and in an unpredictable insurance market. An American turning 65 today has a 70% chance of needing some type of long-term care service, which supports daily living tasks (think: eating, bathing, going to the restroom), according to the U.S. Department of Health and Human Services. The national average cost for long-term care in the U.S. in 2016 was $225 a day (or $6,844 per month for a semi-private room) in a nursing home (and $253 per day, or $7,698 per month for a private room); $119 per day, or $3,628 per month for care in an assisted living facility; $20.50 an hour for a health aide, or $68 per day for services in an adult day health care center, according to the U.S. Department of Health and Human Services.

Leveraging benefits programs to grow employers' EBITDA
By Cort Olsen / Employee Benefit Adviser
For younger, healthier employees, there is usually a low cost, limited coverage plan, while for older employees and those with medical conditions more robust, higher-cost plans are generally available. It’s the costs associated with the latter that Eckelbarger zeroes in on, as these rise faster given that the plan participants are greater utilizers of healthcare and represent a more adverse risk pool for the employer.
To reduce these risk pools, (Kimberly) Eckelbarger shows her clients how to roll all three plans into a single “right-sized” plan reduces costs for employer and employee alike. For the employer, the savings flow straight to the bottom line, increasing earnings before interest, taxes, depreciation and amortization.
Her approach also debunks the traditional wisdom that to reduce costs, employers must reduce benefits. “The truth is exactly the opposite,” says Eckelbarger. “Employers have to increase benefit offerings to reduce cost.”

Critical illness insurance helps employees concentrate on recovery
Advances in medicine mean people today live longer lives, even if they suffer from critical illnesses. Naturally, living longer with a critical illness may mean paying more treatment related costs – a possibility that has many Americans concerned. According to a Sun Life Financial study, many workers fear the financial impact of a critical illness even more than dying from one.1
The 2017 Aflac WorkForces Report survey revealed that health care costs have a long-lasting effect on American workers’ creditworthiness. Over half of participating employees said medical costs are affecting their credit scores, keeping them from paying other bills and thwarting their efforts to save for retirement or a rainy day. The survey revealed that 65 percent of American workers have less than $1,000 on hand to pay out-of-pocket expenses associated with an unexpected serious illness or accident. What’s more, 53 percent would borrow from a 401(k) and/or use a credit card to cover out-of-pocket expenses if they or a family member experienced an unexpected serious illness or accident.2
Chart describes paying medical billsThe Aflac report’s findings are echoed by those of the Kaiser Family Foundation, which found that one-quarter (26 percent) of U.S. adults ages 18-64 say they or someone in their household had problems paying or an inability to pay medical bills in the past 12 months. The study also found that among all people with household medical bill problems, more than 62 percent say the person who incurred the bills was covered by health insurance.3

Amazon has shelved a plan to sell drugs to hospitals, and insiders say there are two reasons why
Amazon has shelved plans to sell and distribute pharmaceutical products through Amazon Business, its marketplace for business customers.
The biggest challenges include complexities around selling in bulk to large hospitals and building a logistics network to handle pharma delivery.
Amazon could still get into the pharma space in another way, as it still has multiple teams working on health care, including Alexa and the secretive Grand Challenge team, sometimes referred to as "1492."
Eugene Kim | Christina Farr / CNBC
Amazon Business, which sells bulk items to business customers, has shelved its plan to sell and distribute pharmaceutical products after considering it last year, according to people familiar with the matter.
Instead, the company is focused on selling less sensitive medical supplies to hospitals and smaller clinics through Amazon Business — and it has found that business to be more challenging than expected.
The setback illustrates the challenges of getting into the medical supply and pharmaceutical space, even for a company as big as Amazon. Several health-care and pharmaceutical distribution companies saw their stock take a nosedive following recent reports of Amazon potentially getting into the space, but it will likely take some time before those concerns turn into real threats.
The change in plan comes partly because Amazon has not been able to convince big hospitals to change their traditional purchasing process, which typically involves a number of middlemen and loyal relationships.

Why I Do Not Believe Medical Plan Design Affects Cost
Michael E. Lichman / President and Founder at Eagle HealthPlans, LLC
I am always amused by employers who, when faced with rising claims and premium costs, cut plan design and shift cost, as though this solves the problem. It does not make the members any healthier, so why the belief that it does anything other than shift cost?
Take two extremes. The first group has all young and healthy employees, and like most groups with young people, they are on a bronze plan with high deductible/out of pocket (OOP)/co-pays. And they had no claims last year. So, if the plan had been gold or platinum, would the employees have sickened themselves just to take advantage of the benefits?
Conversely, take a group with an older/unhealthy membership. They generate a lot of claims. What plan design is really going to reduce costs? Maybe a high deductible, and only if the claimant is not going to hit the OOP so they have some skin in the game. Once they are past the OOP, the sky is the limit (figuratively and literally).
So, how does Level/Self-Funding enter this discussion?
The underwriting of a Level/Self-Funded program is an exercise in “cherry picking”. The 50/50 carriers use an inexact process, the selling point is “ease”, but it is still a selection process. The 100% return carriers by and large use the healthcare consumption audit to select risk, and because it is far more exact, allows these carriers (Eagle among them) to return 100% of margin. This selection process keeps bad groups out of the pool. As an aside, a carrier using the consumption audit, and returning less than 100% of margin, is cheating the client.
The point is that a medically underwritten group, if accepted into our or any other program, can consider providing richer benefits!

Comcast and Independence Health to partner on new health care platform
Comcast is teaming up with Independence Health Group to launch a new consumer-oriented health-care technology platform.
Independence Health is one of the nation's largest Blue Cross health insurers.
The partnership has grown out of the firms' work together on health initiatives in the Philadelphia area, where both companies are headquartered.
Bertha Coombs / CNBC.com
Comcast is teaming up with one of the nation's largest Blue Cross health insurers, Independence Health Group, to launch a new consumer-oriented health-care technology platform.
"The way we're viewing it is as a digital health company," said Brian Lobley, president of commercial and consumer markets at the Independence Blue Cross division. "It's going to be a digital platform that is certainly going to be enabled via the TV, and the Comcast app, but [going] broader than both companies' existing footprint."
The partnership will be structured as a 50/50 joint venture, but will be run as an independent new firm. They plan to begin a pilot program of the platform in the Philadelphia area, where both companies are headquartered, with the hope of launching the new firm and then taking the platform national in the second half of 2019.
"We're going to start with people who are experiencing a health … condition or procedure," such as knee surgery, Lobley explained.
"There's pre-op, post-op recovery, during that time sometimes the patient is on a follow-up medication … what we're looking to do is take that experience, that itinerary that person follows and digitize it," he said.
Comcast is Independence's largest health insurance customer, but the two have also collaborated on local health initiatives. In February, they hosted early-stage health IT start-ups focused on value-based care and improving patient health outcomes.

Wells Fargo Faces $1 Billion Government Fine Over Auto Insurance Scandal: Report
Justin T. Westbrook / Jalopnik
Wells Fargo, the bank accused of unfairly charging high auto collateral protection insurance to hundreds of thousands of customers, may face a fine of $1 billion from the Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency, according to the New York Times.
Last year, Wells Fargo was snared in a number of scandals involving improperly charging mortgage insurance customers and allegedly charging customers for unnecessary automotive insurance coverage. Both scandals factor into the government’s fine, according to the Times.
Some of Wells Fargo’s customers saw their automotive insurance rates unfairly climb almost $600, as Jalopnik has previously reported, in a scheme that affected up to 800,000 people. The company later determined that 570,000 customers qualified for a refund and that the insurance scheme may have led to as many as 20,000 automotive repossessions following an internal review.
In October of last year, Senator Sherrod Brown accused former Wells Fargo CEO John Stumpf of lying to Congress in his 2016 testimony, and in November, the company increased its expected payout to affected customers from $80 million to $130 million.
Federal regulators barred Wells Fargo from expanding until it had satisfied conditions including a change in its board of directors and making structural changes to its internal financial and risk management systems, according to the Times.

Market for insurance to protect telemedicine providers shows rapid growth
Source: Beazley Group / GLOBE NEWSWIRE
Beazley, a specialist insurer of healthcare professional liability risks, has seen strong demand from a wide array of healthcare providers for Virtual Care, its insurance product designed to meet the needs of participants in the telemedicine value chain.
Since Beazley launched Virtual Care in July 2017, more than 90 companies serving in aggregate tens of millions of patients in the US have purchased coverage. The policy combines coverage for medical malpractice, technology errors & omissions and privacy breaches, as well as general liability, products liability and coverage for completed operations. It also covers risks that are unique to telemedicine, such as the legal challenges that can arise when a doctor is in one state or country and his or her patients are in another.
The US is the largest and most mature telemedicine market in the world, with revenues projected by Orbis Research to exceed $7bn by 2020. Accenture’s 2018 consumer survey on digital health recorded that a quarter of consumers surveyed had received virtual healthcare services over the previous year, up from 21 percent a year earlier. The main benefits cited were lower costs and timely access to care that fitted with the patient’s schedule.

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