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by Leila Morris
IN CALIFORNIA
• Emergency Care Gets Poor Grades
• Hospitals Charge Wildly Varying Rates for Childbirth
• California Workers Face Higher Out-of-Pocket Costs
• Genworth Settles in Death Master Case
LONG-TERM CARE
• One Simple Mistake May Be Killing Your LTC Sales
• LTC Insurers Hit With Sex Discrimination Complaints
HEALTHCARE
• Haste Makes Waste When it Comes to Health Insurance Shopping
• Fear and Uncertainty Around Obamacare Persist
• Individual Plans and the So-Called “Death Spiral”
• HMOs Are On Stronger Financial Footing
NEW PRODUCTS
• Chronic Care Whole Life Rider
• Universal Life
• MassMutual Call Center Hours
FINANCIAL PLANNING
• A Snapshot of Hispanic Financial Planning Consumers
• Faith in the American Dream is Eroding, but Financial Satisfaction is on the Rise
IN CALIFORNIA
Emergency Care Is Failing Many Patients
California moved into the top half of the nation for emergency room care with a rank of 23rd and a grade of C-. The 2014 American College of Emergency Physicians’ report card still ranked the state near the bottom of the country at 42nd with an F in the category of access to emergency care, the same grade it received in 2009. In 2009, California received a D+ and ranked 37th in the nation.
The state has the lowest number of emergency departments per person and an inadequate number of hospital beds, as well as shortages of orthopedists, hand surgeons, and registered nurses. Nearly one-quarter of adults in California lack health insurance. To improve its grade, California must increase the health care workforce and expand the supply of emergency departments and staffed inpatient and psychiatric beds, according to the Report Card.
The state received C-’s in patient safety and disaster preparedness. California lacks a statewide trauma registry and a uniform system for providing pre-arrival instructions. The state needs to implement statewide systems and procedures to ensure that all citizens are protected in the event of a disaster.
California’s C+ in medical liability could be improved with pretrial screening panels to discourage frivolous lawsuits. The state’s best grade, a B+ for public health and injury prevention, was due to low rates of smoking and obesity, strong seat belt and safety belt legislation, and outstanding trauma care located within 60 minutes of nearly everyone in the state. For more information visit http://www.acep.org.
Hospitals Charge Wildly Varying Rates for Childbirth
Depending on the hospital, a California woman could be charged $3,296 to $37,227 for a vaginal delivery, and $8,312 to $70,908 for a caesarean section, according to a study by BMJ Group. Hospitals in markets with middling competition had significantly lower adjusted charges for vaginal deliveries. Hospitals with higher adjusted charges are for-profit hospitals as well as those with higher wage indices and case mixes. Hospitals in markets with higher uninsurance rates charged significantly less for caesarean sections while for-profit hospitals and hospitals with higher wage indices charged more. However, the institutional and market-level factors included explained only 35% to 36% of the between-hospital variation in charges. For more information, visit www.group.bmj.com
California Workers Face Higher Out-of-Pocket Costs
California workers are less likely to be offered employer-based coverage compared to recent years. Also, those who are covered pay more in premiums and cost sharing, according to a survey by the California HealthCare Foundation. The survey provides an overview of the landscape leading up to implementation of the Affordable Care Act (ACA) in 2014. Workers may continue to see costs rise next year. More than 40% of firms are likely to increase what workers pay for their premiums in the coming year, and 34% plan to increase employees’ deductibles. However, the 2013 numbers may not signal important trends since the survey was conducted right before the ACA went into effect.
The following are some key findings:
• Sixty-nine percent of California employers offered coverage in 2000 compared to 61% in 2013.
• Premiums in California have risen 185% since 2002, which is more than five times the state’s inflation rate.
• The average monthly premium for single coverage was $572 in 2013, compared to $490 nationally. The average for family coverage was $1,442 compared to $1,363 nationally.
• California workers paid an average of 22% of the total premium for single coverage and 33% for family coverage in 2013, significantly higher shares than the previous year.
• One in four California firms experienced reduced benefits or increased cost sharing in the last year.
For more information, visit www.chcf.org/almanac.
Genworth Settles in Death Master Case
The California Dept. of Insurance reached a settlement with Genworth over the insurer’s use of the Social Security Administration’s Death Master File database. Genworth agreed to pay $1.9 million to state insurance departments; California will receive roughly $175,000 of the settlement amount. Genworth also agreed to use the Death Master File database to search its records for deceased life insurance policyholders so beneficiaries can be paid.
LONG-TERM CARE
One Simple Mistake May Be Killing Your LTC Sales
The most common mistake that a long-term care advisor can make with an affluent Baby Boomer is to use the words “long-term care.” When those words are spoken, clients often hear “nursing home,” which makes them shut down. Instead, advisors should say, “Let’s talk about ways we can keep you in your home longer,” says Kevin McGarry, director of the Nationwide Financial Retirement Institute.
Seventy-eight percent of affluent Baby Boomers think of nursing home care when they hear the term, “long-term care.” However, nearly half of all LTC happens at home, with only 27% taking place in a nursing home and 24% in adult day care. The next step is to get an estimate of long-term care costs and build a plan from there, McGarry said. Four in five advisors say clients are more likely to stay with them if they discuss these issues.
Affluent Baby Boomers are in the dark about the need for long-term care insurance. More than seven in 10 mistakenly assume that the Affordable Care Act will cover their long-term care (LTC) costs in retirement, according to a survey by Nationwide Financial. Neither the Affordable Care Act nor Medicare will help America’s workers pay their long-term care costs. While Boomers desperately want to receive LTC in their home, few are adequately planning for the costs and many are not planning at all.
Harris Interactive conducted the poll of 801 Americans over 50 with at least $150,000 in household income. Only 28% are aware that the Affordable Care Act does not cover LTC costs. Nearly half are worried about becoming a burden to their families; and 54% say they would rather die than live in a nursing home.
John Carter, president and chief operating officer of Retirement Plans for Nationwide Financial said, “Virtually no one wants to end up in a nursing home, but few are planning for long-term care costs. And if they have to rely on Medicaid, they may not have a choice.” Affluent Boomers expect their LTC costs average only $36,220 annually. By 2030, the cost of a nursing home is expected to reach $265,000 per year. For more information, visit www.nationwidefinancial.com/healthcare.
LTC Insurers Hit With Sex Discrimination Complaints
The National Women’s Law Center filed sex discrimination complaints against Genworth Financial, John Hancock, Transamerica, and Mutual of Omaha. The complaints are in response to their recently announced practice to begin gender rating long-term care insurance policies. These complaints are believed to be the first to challenge gender rating in long-term care insurance under the provision of the Affordable Care Act (ACA) that prohibits sex discrimination in health care.
The complaints, filed with the Office for Civil Rights (OCR) at the Dept. of Health and Human Services, assert that the gender rating by these four companies violates the ACA’s anti-discrimination rule in health care. This is the first law to ban gender discrimination in health care nationwide and applies to virtually all aspects of the health care system, including long-term care insurance.
By gender rating their long-term care insurance policies, these companies are charging women 20% to 40% more for the same product, said NWLC co-president Marcia Greenberger. “Requiring women to pay higher prices just because they are women is wrong, unfair and, thanks to the Affordable Care Act, is now illegal sex discrimination,” she added. For more information, visit http://www.nwlc.org.
HEALTHCARE
Haste Makes Waste When It Comes to Health Insurance Shopping
Consumers who use healthcare moderately could face unnecessary out-of-pocket spending if they purchase a higher tier health plan (e.g. silver over bronze) without looking at deductibles and caps on annual out-of-pocket costs. National averages show that deductibles and out-of-pocket limits get lower as the health plan tier rises, but cost-sharing can still vary significantly among plans within each tier (bronze, silver, gold, platinum).
HealthPocket examined the lowest to highest deductibles and out-of-pocket caps for Affordable Care Act health plans in 34 states. For bronze, silver, and gold plans, the differences in deductibles amounts to thousands of dollars among insurance policies in same category. The largest range was within silver plans. The lowest deductible was $0 and the highest was $6,250. The smallest range was among platinum plans with the lowest deductible at $0 and the highest at $1,000.
Also, a top-tier platinum plan could have a higher cap than an entry-level bronze plan. Both gold health plans and platinum health plans had the widest range of out-of-pocket caps ($4,850 difference from the lowest to the highest cap). HealthPocket also found the small business health insurance market had similar characteristics to the individual and family health insurance market. For more information, visit www.HealthPocket.com.
Fear and Uncertainty Around Obamacare Persist
When it comes to the Affordable Care Act (ACA) there is fear and uncertainty among small-business owners, according to a study by Merchant Cash and Capital, an alternative financing company for small businesses. Nearly 40% aren’t sure how the ACA will affect their business.
Some small business owners are already preparing for implementation and are feeling the impact on the health of their businesses in 2014. One in four say they will halt any growth initiatives in the near future as a result of the ACA. One in five say they will put new hiring on hold as they wrestle with increasing operational expenses.
The Small Business Health Options Program (SHOP) exchange is the marketplace for small businesses to choose health plans for their employees. SHOP is available now to businesses with 50 or fewer full-time equivalent employees. Nine percent of small-business owners don’t offer insurance, but plan to use the SHOP exchange to provide employees with coverage; and 5.42% do offer health insurance, but will switch to a new health insurance plan provided through the exchange. For more information, visit www.premierconsultingpartners.com.
Individual Plans and the So-Called “Death Spiral”
Allowing people to keep individual health insurance policies that don’t meet ACA requirements is not likely to send new health insurance exchanges into a death spiral, according to a RAND study. In November, President Obama announced rules that allow current non-group enrollees to keep their existing health plans, provided their state’s health insurance commissioner permits such actions. This was after criticism that some consumers in the individual market were losing their health insurance plans.
The three options to help people keep their old plans would all cause some disruption to risk pools, but not enough to threaten their viability. An option adopted by President Obama to allow state insurance commissioners to decide whether to extend old insurance policies is the least disruptive of the three policies examined by the RAND report. The study predicts the president’s action will have only minimal effect on enrollment and premiums.
The most disruptive proposal would allow people to keep their old health plans and allow others to buy the policies. It would lead to moderate price hikes and sharply lower enrollment in the new marketplaces, substantially increasing federal spending on subsidies for enrollees.
Two alternative proposals have stalled in Congress. One would require insurance companies to continue offering non-compliant individual health plans indefinitely, but not take new enrollees. A second bill would allow non-compliant plans to continue and be offered to new enrollees.
Because each of the proposals would divert many young and healthy people from the new health insurance marketplaces, there has been concern the changes could lead to a self-reinforcing cycle of increasing premiums and enrollment drops that could lead to the implosion of the marketplaces.
All three proposals are likely to increase the number of people with health insurance because many non-compliant insurance policies are likely to be less expensive than those in exchanges. However, many of the non-compliant policies are likely to offer fewer benefits than policies offered in the exchanges.
Opening the non-conforming plans would be likely to raise premiums in the marketplaces by as much as 10% and decrease enrollment by 3.2 million nationally. It would also trigger an additional $5 billion in federal spending on subsidies and tax credits in the individual marketplace in 2015. The two other strategies would result in far smaller cost increases. For more information, visit www.rand.org.
HMOs Are on Stronger Financial Footing
Twenty HMOs and indemnity insurers became financially impaired from December 2008 to December 2013, showing a declining trend, according to a study by A.M. Best Company. The impairment count includes 13 indemnity health insurers and seven HMOs. The annual impairment frequency declined from nearly one in 21 companies in 1998 to one in 526 companies in 2011 and 2012. For more information, visit http://www3.ambest.com/bestweek/purchase.asp?record_code=220647.
NEW PRODUCTS
Chronic Care Whole Life Rider
New York Life introduced a chronic care rider for its whole life product. Policyholders can accelerate the face amount to help pay for chronic care needs. The chronic care rider is a flexible, low-cost addition to a whole life insurance policy with a premium that is guaranteed to stay level. If a policyholder doesn’t use their benefits for chronic care, the funds remain intact for their heirs or as cash value to help supplement retirement income. For more information, visit www.newyorklife.com.
Universal Life
Pruco Life Insurance Company’s newest universal life insurance product offers death benefit protection with tax-advantaged growth potential and the ability to access cash value. Pruco is a subsidiary of Prudential Financial. PruLife Founders Plus UL provides cost-effective death benefit protection with an extended no-lapse guarantee, and offers a choice between two interest crediting account options that can help build cash value in the policy.
http://www.news.prudential.com.
MassMutual Call Expands Center Hours
As of January 1, MassMutual’s participant information call center has remained open one hour later, with highly trained customer service representatives available from 8:00 a.m. to 9:00 p.m. EST. Professionals are trained to help people manage a vast array of retirement needs by answering questions about investment options to helping callers take full advantage of matching contributions. Call center associates also offer roll-in services so customers can consolidate savings from other qualifying retirement accounts to achieve a more holistic picture of their overall retirement savings. For more information call MassMutual at 1-800-874-2502, option 4.
FINANCIAL PLANNING
A Snapshot of Hispanic Financial Planning Consumers
For Hispanics, the American Dream is based on achieving financial security so their families can get ahead – with a specific focus on paying off mortgages, getting out of credit card debt, paying for their children’s college educations, and preparing for retirement. Hispanics are experiencing a cautious increase in optimism about the economy. But their financial planning intentions aren’t closely aligned with their actions, according to a recent MassMutual study. The study also reveals the following:
• 57% of Hispanics say paying off their mortgage is a top financial priority and 46% prioritize getting out of credit card debt — significantly greater than the general population. Despite these higher-than-average initial efforts to achieve financial security, additional steps seem to be lacking. Forty-three percent say that investing and financial planning should be a higher priority for them, and only 28% are confident selecting investment options to meet their goals.
• 49% of Hispanics insist on paying for their children’s college education, yet only 31% rank savings/investing in their children’s college education as a top priority.
• 47% of Hispanics are involved in educating children about finances, and 79% recognize that this education is important for their children’s their success. Thirty-six percent of adults wish their own parents had taught them more about money.
Chris Mendoza of MassMutual said, “We’re working harder to inform Hispanics about resources available that can help them put concrete financial plans in place and to adequately address their current and future needs. Not only does life insurance provide financial protection if the worst were to happen, but some policies also accumulate cash value – a living benefit that can be used for supplementing retirement income, funding a child’s education or emergencies.”
For more information, visit massmutual.com/familyfinances.
Faith in the American Dream Is Eroding, but Financial Satisfaction Is Rising
Though the economy is showing signs of recovery, Americans’ belief in the American Dream is deeply shaken. Half of older Millennials (25 to 32) and 45% of older Baby Boomers (54 to 64) say the American Dream is disappearing completely, an increase of 15% over the past two years.
Seventy-eight percent of older Boomers consider home ownership to be a key to achieving the American Dream, and 80% consider financial independence to be equally important. Younger respondents have notably less engagement with these historic benchmarks, instead focusing on developing a monthly budget, according to MassMutual’s third biennial study. The study also includes the following:
• Only 17% of Chinese Americans and 28% of African Americans say the American Dream is disappearing compared to 42% of Caucasians.
• Thirty percent of families are satisfied with their financial situation, up from 18% in 2009. Thirty-nine percent say they are very good at managing money, compared to 30% in 2009. Gen X (33-44) trails the pack in terms of financial satisfaction and investment confidence.
• Thirty-eight percent of younger Boomers (ages 45-53) are satisfied with their financial situation compared to 30% of older Boomers (54-64), a gap which has grown continually wider over each prior survey. Older Boomers also own markedly fewer financial products versus younger Boomers.
• Seventy-two percent of families say that it is important to educate children on finances while 49% of families are educating their children about money management.
For more information, visit www.massmutual.com or find MassMutual on Facebook, Twitter, LinkedIn,