STM and GAP Plans Discussion.

[bluemarlin08]

EVERy other type of insurance underwrites. And thanks, I am very young and trying to learn from you older guys with lots of experience. Sorry if my inexperience shows.

 

[junkman]

EVERy other type of insurance underwrites. And thanks, I am very young and trying to learn from you older guys with lots of experience. Sorry if my inexperience shows.

Don't get your panties in a wad and ignore the rest of the post. Pre- ex and underwriting are to guard against adverse selection. The requirements are well understood which is the reason for the coverage mandate that the congressional idiots are shouting about.

Learn the contract specs and applicable rules then figure the best option for your client. Realize that a STM has many more holes than an ACA contract and note that pre-existing and how it can be used by the carrier is by far the largest hole. A cheaper STM is usually cheaper ONLY because it is expected to pay less claims &/or has lower acquisition costs (read commissions).

If you sell a cheap contract you and client had better understand what's been cut out. A perfect example of cheap vs expensive is in the DI arena. Group DI and some individual contracts require a loss of income to pay where others only require the inability to perform the job duties. Try explaining to your wealthy business owner client that the cheap contract you sold won't pay because his employees are keeping things a float and he still has income.

If he bought it, it's on him. If you sold it without explaining, it's on you.

It's easy to be healthy when young. When old, you have to consciously expend time and effort.

 

[bluemarlin08]

Thanks for the tutorial. Being young and new to the business I have a lot to learn, panties no longer in wad.

 

[Evan]

You must be young. When you underwrite, you exclude. Underwritten individual health contracts used to be almost impossible to have issued with out exclusions. When only the healthy have access to coverage, we don't have insurance. When only the wealthy have access to healthcare, we don't have healthcare and decline to a 3rd world position.

We "could" for example pay for healthcare with insurance and have everyone pay for insurance with tax dollars. Taxes could be a flat tax similar to medicare. Plan design could be based on income. Carriers could come up with supplements that integrate with the core plan. Everyone has to be included and everyone has to pay something.

Regulating procedure prices would lead to fewer providers and less access but if we want to rely on "market forces", we need the market to apply at the provider level. Our current system only makes us care about OOP and not procedure cost. I'm looking at an EOB where the lab company (Quest) billed $273.05. The carrier (BCBST) discounted it to $25.55. WTF?? Healthcare prices have turned into funny money. We could eliminate the carrier overhead if the lab would simply bill $25.55.

I favor HDHP plans and every benefits agency I know of went to them. I had an HSA the 1st year they were available. HSAs don't work for those with no money and I expect that paying for their healthcare would be cheaper if given incentives for having good as in healthy lifestyles.

People with diet preventable illnesses could be stuck with the higher OOP plans. I don't mind paying for an old person that exercises and has controlled blood pressure but don't want to pay for an obese diabetic smoker that continues to smoke and eat donuts. I've watched church friends eat Hunny Buns hot out of the microwave then complain about the cost of insulin ($175/month). Of course, that points to 2 problems. Hunny Buns shouldn't be scarfed by fat diabetics and there is no reason for insulin to be that expensive.

Drug companies make minor changes to keep a patent in place and don't make the cheap generic version. They also sell drugs at more in the US making us pay for development costs while selling overseas so long as the price is above production costs. Congress gives lip service to "market forces" while taking payments from the drug companies and allowing the drug manufacturers to rape or at least pillage.

That paragraph is a load of crap. I sold from 2002-2014 underwritten plans. If you knew the underwriting from one carrier to another your job would be to find the carrier who wouldn't exclude certain conditions or rated up considerably. In 90% of my cases an exclusion was not needed.

 

[bluemarlin08]

That paragraph is a load of crap. I sold from 2002-2014 underwritten plans. If you knew the underwriting from one carrier to another your job would be to find the carrier who wouldn't exclude certain conditions or rated up considerably. In 90% of my cases an exclusion was not needed.

That certainly was my experience as well.

 

[somarco]

Well, Bluemarlin, since you are so young and inexperienced I don't imagine you wrote enough business to really develop the kind of numbers Evan experienced.

 

[junkman]

That paragraph is a load of crap. I sold from 2002-2014 underwritten plans. If you knew the underwriting from one carrier to another your job would be to find the carrier who wouldn't exclude certain conditions or rated up considerably. In 90% of my cases an exclusion was not needed.

That certainly was my experience as well.

You have a different experience than I. Carriers are not your friends and will deny claims when possible. Rates are based on expected claims and contracts are written to have actual claims <= expected.

There have been few carriers selling individual health insurance in a given state for many years. There used to be insurance lookalikes what were really self funded trusts and they frequently folded when claims climbed. Proposals said "Underwritten by XXX Carrier". The strategy was underwrite down to a gnat's ass, use low rates to under price other plans. Then clean house when rates went up by offering via the agents those that were healthy a new underwritten plan. That left the unhealthy on the old trust which drove rates up further.

On the group side, we used to fax 40 RFPs out changing only the cover page. Quotes were snail mailed since fax machines only had the crappy rolls of paper. Having 40 carriers available made it easier to find a wrinkle and beat the incumbent agent who had become complacent. Now, there are at most 5 carriers. Many were acquired by UHC or may have merged 1st & then been bought.

I remember 1 carrier Cariten with rates 15% under the majors. We would show their quote then sell against it. People bought it anyway because after all, 15% was 15%. The trouble started when claims came in and employees started getting bills because the admin was so bad.

The point is rates are ALWAYS a function of expected claims. Cheap means less claims expected by the ACTUARIES who are educated and have data on which to design the plan. You as agent can ferret out what some of the holes are and perhaps decide that the cost of filling the holes it too high. Choose the lesser plan if it makes sense but note that the holes are there.

Underwriting and pre-ex are only to prevent adverse selection nothing more. There are other ways to accomplish the same thing. Having the entire population of eligibles enrolled is 1 way. Having a short waiting period but not exclusions on pre-ex is another.

 

[bluemarlin08]

Well, Bluemarlin, since you are so young and inexperienced I don't imagine you wrote enough business to really develop the kind of numbers Evan experienced.

Just a young grasshopper trying to get myself edumecated.
Sure miss AL Williams and Mega, those were the days I hear.

 

[somarco]

For many years when Ted Miller managed Red, Green and Black "Net" plans for BFAW (later Corroon & Black) that those self funded trusts did quite well. I believe they were issued down to 3 lives, possibly less.

When Ted left to set up his own MGU things went down hill and eventually they bit the dust. They ran quite for 15, maybe 20 years.

I remember 1 carrier Cariten with rates 15% under the majors.

Cariten is an insurance agency out of Knoxville acquired by Humana in 2008. Perhaps the spelling is off?

Cariten is a health-benefits company serving commercial, Medicare and Medicaid members in multiple counties throughout the East Tennessee region.

Humana Completes Acquisition of Cariten Healthcare | Humana Healthcare

There are other ways to accomplish the same thing. Having the entire population of eligibles enrolled is 1 way.

Auto insurance is mandatory in most, if not all states. Does 100% of the population have auto insurance?

You do realize auto insurance is still underwritten and priced by risk, right?

Depending on whose numbers you want to use, somewhere around 85% of the population has health insurance right now. What will it take to get to 100%?

 

[junkman]

Cariten was selling health insurance on their paper. I forgot which network they used. The reps talked a good game but service was HORRIBLE and we soon quit selling them where we initially recommended against them but would implement if they were what the client chose.

I'm in the process of applying for an underwritten FB individual plan for my wife & son. Anyone that wants to go back to that is flippin nuts. Medical questions go back 10 yrs and cover EVERYTHING. Many can't pass underwriting. Results of a physical <6 months old have to be submitted. I don't know for sure whether they will ask for complete medical records but how many clients do you know that only get annual physicals and will be outside of the 6 month limit. Of those, how many want to go get a physical in time to get it into UHC?

Premium is only a few dollars more than UHC's STM and are ~ 1/2 the price of a higher OOP ACA plan so we'll jump through the hoops and let the FB agent who has done nothing get paid - if it goes through and is effective 2/1 WTF!!

All of our problems will be over in a few weeks cause the Donald is gonna handle everything - NOT. Let the raping and pillaging begin - er continue.

Edit @ Somarco: Yes, Auto ins is underwritten and actions behind a wheel can be controlled as can other inputs like credit score. AND there is a big difference between Auto and Medical premiums AND, one does not have to drive but one cannot be outside of the healthcare system. If nothing else, the ambulance will haul you to the ER and the ER will treat you. Of course, that expense will be loaded onto someone - most likely those with insurance in the form of procedure costs.


We will go down in coverage as those off-ex get priced out. $20,600 for a family of 3 for a $5,200 Ded and a $6,400 OOP is too much. Subsidy drops of at ~80,000 MAGI and penalty doesn't kick in until ~250,000 MAGI. For those without a calculator, $20,600 is enough to buy a new refrigerator every month or a car every year or a really nice car new every 2 or 3 years.