Archive for April, 2010

End of an Era: St. Vincent’s Hospital Closes

April 30th, 2010 by admin | Comments Off | Filed in health insurance, insurance news, insurance specialists

For 160 years, St Vincent’s hospital in New York City was a stalwart figure in the world of healthcare. Today, the Greenwich Village hospital closed its doors forever.

St. Vincent’s was founded in 1849, and served as the flagship of St. Vincent’s Catholic Medical Centers of New York, and recorded $502 million in total revenue last year. Despite that, it also posted a net operating loss of $107 million, according to bankruptcy filings. Roughly 47% of the patients served by the emergency room in 2009 were either uninsured, on Medicaid, or on Medicare.

The 511-bed hospital began to see trouble in 2000, when the corporate owners merged with several other hospitals and nursing homes, leading to a financial deterioration and eventually bankruptcy in 2005. There was a restructuring plan that included more than $1 billion in outstanding unsecured liabilities, but the system never righted itself, and without a buyer, another bankruptcy was filed and closing became inevitable.

During its 160 years of operation, St. Vincent’s saw outbreaks of cholera and AIDS and, as the only level-1 trauma center on the lower west side of Manhattan, also helped many, many patients in the aftermath of the 9/11 terrorist attacks.

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Americans will Work Longer to Keep Luxuries, Survey Says

April 28th, 2010 by admin | Comments Off | Filed in insurance facts, insurance specialists, life insurance

Recent reports shows that more and more American citizens are postponing retirement in order to maintain lifestyles which include little luxuries.

The company surveyed more than five hundred financial advisers – professionals who deal with everything from life insurance policies to general accounting – 61 percent of whom said that their clients are less concerned with retirement needs than they are with little luxuries like eating out, and being able to travel from time to time. These results point to a significant gap between fantasy and reality present in many American households. With the future of Social Security uncertain, health insurance premiums getting higher, and retirement funds still reeling from the economic crises of the last two years.

The general consensus is that there is a significant need for Americans to be better educated about the realities of retirement. According to various financial advisers, less than half of their clients truly comprehend the amount of money they need to save in order to retire in comfort. Further, they agree that there clients require guidance on the care and use of their nest eggs, in order to retire without wiping out their financial security.

Another point revealed by the survey was that more than half the clients of those advisers who participated have postponed their retirement, either because of stock market losses (46 percent) or health insurance and medical care costs (40 percent).

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Florida Insurance Reform Bill Passes Senate

April 26th, 2010 by admin | Comments Off | Filed in homeowners insurance, insurance news

It’s the final week of Florida’s legislative season, and it looks like the state Senate has it’s property insurance reform bill back on track.

After the bill he sponsored (SB 2044) got hung up in debate last Thursday, Senator Garrett Richter ironed out some confusion regarding the timeline in which homeowners would be paid for losses, and also agreed to a sinkhole provision. On Friday, the bill passed the Senate in a 32-4 vote.

The Richter measure addresses insurers’ concerns regarding claims payments, but does not give them complete freedom to raise prices, although it does allow them to increase rates by up to 10 percent per year in order to pass through their reinsurance costs. In addition, the bill allows insurers to to drop some policies if keeping them would threaten their solvency. Finally, it gives regulators access to specific financial information on the companies affiliated with insurers which claim to be losing money.

The bill must now pass the Florida House, which has been working on its own, similar measure (HB 447), and then avoid a veto by Governor Charlie Crist, who had previously stated that a measure to deregulate rates – since taken off the table – would be vetoed.

Richter (R-Naples) believes his bill strikes a balance between regulators, insurers and consumers, but progress on the bill only came after its withdrew the afore-mentioned deregulation proposal. The two-year sponsor of that bill, Mike Bennett (R -Bradenton) decided that pushing the measure (SB 876) was unwise at this time, since the governor had already warned any such bill would be vetoed.

J.D. Alexander (R- Lake Wales), the Senate’s budget chief, said that Governor Crist has the “bully pulpit” as governor, and that no one wants to hand him anything he can use for political leverage.

The legislative season ends this week.

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Recycling and Insurance?

April 23rd, 2010 by | Comments Off | Filed in insurance news, insurance specialists

Yesterday was the 40th anniversary of the Environmental Protection Agency and it’s Earth Day awareness program. We’re all familiar with the EPA’s “reduce, reuse, and recycle” slogan, but that phrase is much more than a mere tagline. The EPA wants it to be a way of life for people and businesses throughout the country.

In honor of the occasion, the Insurance Journal podcast hosted Nicole Croteau, vice president of Willis Programs, to speak about how the recyling industry, and it’s insurance program, have grown and developed over the years.

Enjoy.

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Hospital Cost Shifting Not a New Trend

April 21st, 2010 by admin | Comments Off | Filed in auto insurance, health insurance, insurance news, medicare

Recent confirmed reports of an alarming change within the hospital industry, one that has been going on since long before the passage of the healthcare reform bill last month: Because they get lower reimbursements from public health insurance services like Medicaid and Medicare, many hospitals are trying to find new ways of making money, and some are doing that by shifting costs away from conventional insurance and toward car insurance companies. How? By raising auto accident injury claim costs, and forcing those insurers to take more careful looks at their hospital bills prior to payment.

In a recent study released by the Insurance Research Council (IRC), it was estimated that in 38 tort and add-on states, cost shifting for bodily injury (BI) claims resulted in $1.2 billion in excess hospital charges in the 2007. That’s a fairly large number, but the study also says that the full impact of hospital cost shifting, especially when other states and other kinds of coverage are factored in, is likely to be much greater.

According to Elizabeth Sprinkel, senior vice president of the IRC, “The conventional wisdom is that hospitals aggressively seek to shift costs from public insurance programs to private payers such as auto insurance companies. With this study, we now have information on the magnitude of cost shifting and a better understanding of the need for supportive state laws and effective tools that will enable auto insurers to pay hospitals appropriately and help control auto injury claim costs.”

Sprinkel also said that hospital cost shifting to auto injury claims .”…illustrates the complex relationship between property/casualty insurance and the broader healthcare and insurance system.” She went on to add, “Healthcare legislation enacted by Congress last month underscores the complexity of this relationship. It will take months, if not years, to understand the full impact of the reforms on hospital cost shifting and the auto insurance system.”

In order to analyze the relationship between health system features and automobile injury hospital costs, the IRC had to develop a statistical model of average hospital charges for injury claims in different states. The model then confirmed key predictors of the average hospital charges, which were the percentages of a given state’s population without health insurance, and with Medicaid coverage.

Excess hospital charges due to cost shifting were estimated by comparing average BI liability claims charges in Maryland with average charges in 38 other tort and add-on states. Maryland was used because it received a government waiver in the 1970′s which allows it to regulate hospital reimbursement rates for all “purchasers of hospital services,”and which means there are almost no hospital cost shifting in that state. Maryland, therefore, makes an excellent “control” state, and in all cases, IRC found that average hospital charges for auto injury were substantially lower there than in most other states. Likewise, the costs of expensive diagnostic procedures performed in Maryland hospitals were lower than in other states, but, when performed outside a hospital, the costs were much more similar to those in other states.

The IRC study, Hospital Cost Shifting and Auto Injury Insurance Claims, is based on data from more than 42,000 auto injury claims closed with payment under the five principal private passenger coverages. Twenty-two insurers, representing 58 percent of the private passenger auto insurance market in the Unites Sates in 2006, participated in the study.

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Insurers ReClassify Admin Expenses as Medical Expenses to Circumvent New Regs

April 19th, 2010 by admin | Comments Off | Filed in health insurance, insurance news

The deadline for doing so isn’t until the first of next year, but already some of America’s largest health insurance companies are changing their accounting to reclassify administration costs as medical expenses, in order to work around industry reforms mandated by the recently-passed health care overhaul, says news agency Reuters, reporting on a U.S. Senate panel’s report that was recently released.

Under the new health care law, insurance companies must change their spending habits to meet new restrictions, which specify that large group plans must spend at least 85 cents of premium dollar on actual medical care, while small group and individual plans are required to spend 80 cents of every dollar on medical care, as opposed to administrative expenses.

At issue, is the fact that some health insurers are merely reclassifying expenses, and it’s not just an issue for patients, but for investors as well. According to Reuters, Wall Street keeps a close watch on such spending levels, which are known as “medical-loss ratios” or “MLRs,” to gauge the potential for profit. After the Senate report was released, major health insurance stock indices fell.

The Democrat-led Senate Committee on Commerce, Science and Transportation said in a statement, “The insurance industry is beginning to consider the financial impact of the new federally required (medical) loss ratio requirements, including questionable changes in their accounting practices. Wellpoint, Inc., it said, “…has already ‘reclassified’ more than half a billion dollars of administrative expenses as medical expenses.”

When asked for comment, Kristin Binns, WellPoint spokeswoman, said that the company would work with industry regulators to implement the MLR requirement, but she didn’t speak to the issues of cost shifting or accounting practices.

According to another Reuters article, a review of insurance company expenses for the 2009 fiscal year shows that in some markets, the average amount spent on actual medical care is only 74 cents of every premium dollar.

Chris Curran, Cigna spokesman, said it was too early to know how that company would be affected by the new rules, and that new calculation methods were still in development. Other insurers chose not to comment at all.

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California Workers Comp Rates Are Too Low

April 16th, 2010 by | Comments Off | Filed in insurance news, insurance specialists, workers compensation insurance

The Workers Compensation Insurance Rating Bureau (WCIRB) of California has issued a report stating that written premiums for the year of 2009 are too low. Specifically, the gross written premium for last calendar year is about $8.9 billion, which is 17% lower than the reported numbers for 2008 and only 62% of the 2004 total.

This data was released in the organization’s “Summary of December 31, 2009 Insurer Experience,” in which WCIRB projected $6.9 billion in total accident year loses for 2009, or nine percent beneath the 2008 level. Further projections include an ulitamte accident year (AY) loss ratio of 75% for 2009, which is six percent higher than the estimated value for AY 2008, and the highest loss ratio since 2002.

The Bureau does has not yet compiled expense data for 2009, but it did say that the combined ratio is likely to be significantly higher than 2008′s 108%.

According to WCIRB, the average 2009 indemnity claim will cost about $58,000, which figure represents a 4% increase over 2008, after three years of 13%/year increases.

So what does this mean to Californians? Take a close look at your benefits packages – your company may have to pay more, and they may find a way to pass that payment on to you.

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