Saving You Money For Life

More and more working Americans are turning to government-sponsored health insurance programs of one sort or another, simply because the health coverage offered through their employers is too expensive. Many states have created a ‘second’ safety net for working citizens with modest incomes for health coverage. This support comes in the form of government run clinics, subsidized coverage for children, and other programs that put some sort of health coverage within reach of working families with low incomes.

In Vermont, legislation passed this year contained provisions that are expected to move a projected 1,068 Vermonters off of government insurance programs and onto private, employer-sponsored plans. Effective next October, the state will begin offering subsidies to workers whose employers offer health insurance plans that require employee contributions.

The program would subsidize the employee contributions, with the goal of not increasing costs to the worker. If the subsidies cost more than keeping the worker on Vermont’s Medicaid-affiliated health program, the worker would stay on the state program.

Lawmakers appropriated $1 million to launch the program to get people to switch to employer-backed health care. The pilot program will provide a testing ground for the concept. The change is expected to reduce state and federal health outlays by $6.1 million a year, but is also expected to add about $5.8 million in new costs for employers. It should be noted that those costs are benefits that the employers have offered to employees but which have not been utilized.

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While India is busily transforming itself into a world economic power and its expatriates becoming major players in the North American technology field, it appears that some of the older cultural elements in Indian society require a little government assistance for their transformation.

Asian societies have long valued the birth of a son as a much more important addition to a family than a daughter. Conversely, girl children are often looked on as a burden, or as property to be passed off in arranged marriages. To counter the vestiges of this social anachronism the Indian government has proposed an insurance policy to be provided for girls being raised in India today.

Renuka Chowdbury, head of the Women and Child Development Ministry, has proposed an insurance cover of 100,000 rupees for girl children as “an incentive for their upbringing. Under the scheme, an insurance cover of 100,000 rupees will be provided for the girl child as a safety net, which would be given at the age of 18 years.” So says a news story out of New Delhi.

“Under the scheme, cash would be transferred to the family of the girl child, preferably to the mother on fulfilling certain conditions such as birth registration of the girl child, immunization, enrollment and retention in school and delaying the marriage age beyond 18 years.”

Expressing concern over the falling sex ratio of the girls due to female foeticide, Chowdbury said her ministry has taken up the matter of including gender sensitization and right of the child for inclusion in the school curriculum. According to the news story,she said, “female foeticide should be treated as a crime and not just a social evil.”

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In our continuing quest to root out exotic forms of insurance today we bring you our latest truffle: diving insurance. Scuba diving is officially designated as a ‘dangerous sport’ (we have not identified the official source as of yet) and accordingly, it is not always easy to find insurance for participating in it.

Many general travel insurance policies exclude coverage for injuries incurred during certain activities and scuba diving is often one of those activities. However there are specialized policies for the sport out there and as with any other form of insurance, it’s important to make sure your coverage is adequate.

Divester Magazine addresses some of the principal points that should be pursued for adequate coverage. One point that isn’t mentioned but is worth observing is that scuba diving requires a training program and certification for anyone who wants to get involved in the sport. That alone should reduce the chance of accidents for diving as opposed to, for instance, off-road vehicles or snowmobiles..

Here are some of the issues that divers face when seeking insurance coverage for their diving vacations:

* Are trip cancellations covered including all fees for dive trips?
* What is the maximum depth you’re covered to?
* Will they pay for a decompression chamber?
* Will they pay for emergency evacuation by helicopter or other means?
* Is your equipment covered for theft, damage, or flood?

An interesting list, especially for those of us who think that a decompression chamber is the local pub.

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The federal flood insurance program is going broke after years of bureaucratic inattention and political abuse. The program owes the Treasury $20 billion. It takes in just $2 billion a year in premiums and one third of that sum is used to pay interest on the debt.

Years ago federally subsidized flood insurance replaced private insurance for homeowners who could no longer find a private insurer willing to cover their homes. For people who chose to build in flood-prone areas, the Reagan Administration enacted a law called the Coastal Barrier Resources Act (COBRA). Instead of restricting development in flood zones, the law provided that the government would not subsidize such construction, through flood insurance or infrastructure such as roads.

However, Congress has repeatedly altered the covered territory, often in response to wealthy property owners who want exemption. Lawmakers have redrawn COBRA maps more than 40 times in the past 15 years and many of these taxpayer-subsidized exemptions are for extremely valuable properties – coastal homes.

While they couldn’t manage a Federal Budget bill this year, Congress did find the time to pass two bills carving out new exceptions to restricted areas. One of the bills benefited Jekyll Island, a vacation spot off Georgia’s coast that is targeted for wealthy beach homes, while another helped a mostly undeveloped 10-lot subdivision on Florida’s Gulf Coast. Indeed, in the two COBRA bills that were passed they added hundreds of high-risk properties that literally paved the way for construction in flood prone areas.

Savannah Rep. Jack Kingston, who sponsored the Jekyll Island bill, agreed that the exemptions raise valid questions about the system. But he said he took up the cause because he believed his constituents were being unfairly harmed by a map error. And, he added, “It’s better to have people insured than to have to pay the money out in the wake of a disaster like Katrina.”

Huh?

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Governor Mike Huckabee has announced a new health insurance support program inaugurated by the state that will allow small business owners and their employees better access to medical coverage. Currently only 29 percent of small businesses offer health insurance because the cost is too high.

The plan, called ARHealthNet, offers affordable medical benefits to those adults who work for a small business that hasn’t offered health care coverage in the past year or longer. The plan utilizes federal money and state funds from the state’s tobacco settlement to subsidize the cost of insurance for small-business owners’ lower-income workers. Lower-income workers will have to have an annual household income of 200 percent of the federal poverty level or less. These individuals will be subsidized, while it will be up to the employer to provide a standard health insurance program to the remaining employees.

Huckabee said he wasn’t sure what the cost of the program will be for the state, but that it could fall between $20 million and $30 million. Capacity for the program is limited to 15,000 people until September 2008. After that, it will be expanded to 80,000 people.

The cost for the small businesses will vary from $30 to $300 per month for each employee, depending on the employee’s income and number of dependents. Employees will share the costs by paying deductibles, co-payments and possibly some premiums.

The Arkansas Health Department has had the plan in development stage for five years. It is another example of a ‘safety net’ being developed for working people of modest means. Huckabee did note, however, that the program has its limits. Covered employees will receive six doctor visits a year and seven inpatient hospital days per year.

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A trade association representing almost 1,300 insurance companies with 200 million customers announced last week that all of its members have agreed to support a common set of standards for creating and managing electronic personal health records.

America’s Health Insurance Plans (AHIP) – an industry trade organization – compiled the standards with Blue Cross and Blue Shield Association. Scott Serota, president and CEO of the Chicago-based Blue Cross network, said that all 39 Blue Cross and Blue Shield plans in the U.S. are aiming to offer standards-based personal health records (PHRs) to their 98 million clients by the end of 2008.

“Health plans have existing relationships with patients and providers, and we can help ensure widespread adoption and use these PHRs nationally,” Serota said. “We need to have a seamless, interoperable nationwide system that will serve all members.” He said 13 of the Blue Cross plans have PHRs in place, and 12 others have plans under development.

The CEO of AHIP in Washington said that the companies will use insurance claims data to populate the PHRs. The claims data “can help patients record their experiences,” she explained. “The plan allows test and lab results to be captured in a secure, Web-based environment.” An outside observer might point out that the security of web-based private information systems remains an open question.

Ron Williams, CEO of Aetna Inc., likened the effort to the development of common standards created by the banking industry for the ATM system. That is a reasonable comparison, but only to a point. The ATM system does not pass along financial transaction data from one bank to another. As presented, the PHR program would be information gathering based on insurance claims. To the untrained eye, that looks like an instant risk analysis on any person with a record in the database.

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The emergence of Chinese corporate entities as major players in the banking and insurance business has, for the most part, been actively encouraged by their government. Blending these two particular industries has raised some concern, however, and provides an interesting example of the problems faced by an economy trying to leapfrog one hundred fifty years of corporate growth.

The Chinese Banking Regulatory Commission has suggested that China’s banks should not set up insurance operations. The Commission Chairman is reported as saying that there are widely different business models and corporate cultures in these two sectors, and there are few successful precedents for banks entering into insurance.

Liu noted that banks operate on the basis of risk control, and their employees have comparably stable and high salaries. Insurance employees gain most of their income from commissions on sales with a low salary base. Two major Chinese business banks have applied to the Commission for permission to develop insurance arms. Neither application has been approved.

While warning against banks moving into insurance, Commission Chairman Liu Mingkang said he is positive on banks moving into investment banking, adding that based on international experience, this kind of corporate combination is easier to manage.

China has been looking to create financial holding companies that engage in operations across a wide range within the financial sector. It sees this as one way to compete with better capitalized foreign firms. China’s central bank has said it wants to remove barriers between the banking, insurance and securities sectors as it is a necessary step for China’s financial reforms. It appears, however, that regulators may have different views on how to remove the barriers between the various sectors.

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Granted, Singapore has a reputation as an Orwellian nation-state where everything is a little too perfect and a lot too controlled. But their approach to medical coverage for alien and immigrant workers presents a remarkable contrast to this country’s approach to both health care and foreign labor.

The Singapore Manpower Ministry (Orwell spins in grave) is considering a medical insurance arrangement for all foreign workers that will meet their medical expenses. The reason for this announcement is that another Singapore government agency, the Health Ministry, is getting out of the business of subsidizing health coverage for foreigners.

With the recent announcement that medical subsidies for foreign workers would be withdrawn, the government now wants to make sure that when they fall sick, there is some provision to meet their medical expenses. While many employers have medical insurance for their foreign workers, there are some that do not.

One concern in the private sector is a pandemic situation where companies are saddled with massive medical costs for large numbers of sick employees. According to a Ministry spokesman, “Some employers have fed back and asked if there can be a group insurance for these foreign workers. That is a good idea. We are exploring to see if we make medical coverage compulsory for all foreign workers, whether that will drive down premiums.” That is an idea worth considering.

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The astonishing emergence of China as a world economic power has been a complex affair, with the traditional market forces being managed by a central government that is at once agile and still a visible remnant of the hard-core Maoist centralized economy.

The insurance industry is a prime example of the speed with which China’s managed economy has harnessed the best of capitalism. In the five years that China has been a member of the World Trade Organization, its insurance industry has both blossomed as a domestic product and been opened to international investment. Recently, the Chinese Insurance Regulatory Commission announced a plan to allow foreign firms to invest as much as 50% in existing Chinese insurance companies.

The old 5 Year Plans of the post-war Mao era now look like corporate growth charts. According to the People’s Daily Online (That’ll shake up some old lefties) during the 10th Five-year Plan (2001-2005) period, China’s gross domestic product (GDP) posted an annual growth of 8.8 percent, while insurance sector saw an annual growth rate of 35 percent, exceeding financial sector’s 15.8 percent.

Under the 11th Five-year Plan, China’s insurance revenue is expected to exceed one trillion yen (125 billion U.S. dollars) by the end of 2010, and insurance assets are expected to hit five trillion yen.

“This may indicate that China’s insurance sector may enter a fast growth period, with a growth rate of more than 15 percent in the next five years,” said Huang Huamin, an analyst with CITIC Securities Co. Huang also recognized that the premier driving force in this industry is the rapidly developing Chinese middle class.

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The Houston Astros Baseball Club reached a settlement Thursday with Connecticut General Life Insurance over a lawsuit filed against the company after it denied the club’s claim to recoup a portion of Jeff Bagwell’s salary from 2006.

Bagwell has been fighting off disabilities for a couple of years. Many baseball teams take out insurance policies on their high-priced athletes, especially those whose performance is clearly tied to gate attendance. Bagwell has long been a premier player for the Astros, and in 2006 his guaranteed salary was $17 million.

Attorneys for the Astros filed a lawsuit in April against the insurance company, claiming breach of contract, because the company denied the Astros’ claim to get back $15.6 million of Bagwell’s $17 million salary. The amount of the settlement was not disclosed. The joint announcement from the baseball team and the insurance company stated in part that, “The Houston Astros and Connecticut General Life Insurance Company have reached an amicable resolution of the lawsuit brought by the club relating to the total disability policy on Jeff Bagwell.”

The term ‘total disability’ is probably a key to the terms of the insurance policy. It is certainly a key to the health of the ballplayer, as Bagwell announced his retirement the day after the settlement was made public. Bagwell is 38 years old, and retires with a career total of 449 home runs.

Bagwell, 38, announced his retirement Friday.

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