CHICAGO--(BUSINESS WIRE)--April 27, 2005--Unitrin, Inc. (NYSE:UTR) reported today net income of $67.9 million ($0.99 per common share) for the first quarter of 2005, compared to net income of $48.0 million ($0.71 per common share) for the same period in 2004. Net Income increased due primarily to improved operating results in the Company's business segments, partially offset by lower Net Realized Investment Gains.
Dick Vie, Unitrin Chairman and Chief Executive Officer, commented, "We are pleased to report record first quarter operating results, which excludes investment gains. The combination of our personal lines operations into our Kemper Auto and Home segment and the launch of our Unitrin Business Insurance segment both are off to strong starts."
Total Revenue
Total Revenue was $747.1 million for the first quarter of 2005, compared to $745.3 million for the first quarter of 2004, an increase of $1.8 million. Net Investment Income increased by $11.8 million due primarily to a higher level of investments. Total Earned Premiums for the first quarter of 2005 were $615.2 million, an increase of $1.0 million compared to the first quarter of 2004. Earned Premiums increased in the Unitrin Direct segment, mostly offset by decreased Earned Premiums in the Unitrin Specialty segment.
Net Realized Investment Gains were $5.7 million for the first quarter of 2005, compared to $18.5 million for the first quarter of 2004. Net Realized Investment Gains for the first quarter of 2005 includes pre-tax gains of $2.2 million from the sales of a portion of the Company's investment in Baker Hughes common stock and pre-tax gains of $1.7 million resulting from the sales of a portion of the Company's investment in Hartford Financial Services Group, Inc. common stock. The Company cannot anticipate when or if similar investment gains may occur in the future.
Quarterly Segment Results
Unitrin is engaged, through its subsidiaries, in the property and casualty insurance, life and health insurance and consumer finance businesses. The Company conducts its operations through six operating segments: Kemper Auto and Home, Unitrin Specialty, Unitrin Direct, Unitrin Business Insurance, Life and Health Insurance and Consumer Finance.
Effective January 1, 2005, the personal lines operations of Unitrin's former Multi Lines Insurance segment were combined into the Kemper Auto and Home segment and the remaining commercial lines operations of the former Multi Lines segment have been renamed "Unitrin Business Insurance" and will continue to operate as a separate business segment. Amounts for the prior period have been restated to conform to the current management reporting structure.
Kemper Auto and Home
Earned Premiums in the combined Kemper Auto and Home segment decreased by $0.5 million for the first quarter of 2005, compared to the same period in 2004, due primarily to lower volume, partially offset by higher rates. Net Investment Income increased by $3.5 million for the three months ended March 31, 2005, compared to the same period in 2004, due primarily to higher levels of investments and higher yields on investments.
Operating Profit in the Kemper Auto and Home segment increased by $17.0 million for the first quarter of 2005, compared to the same period in 2004, due primarily to lower incurred losses and loss adjustment expenses ("LAE") and the higher net investment income, partially offset by higher insurance expenses. The Kemper Auto and Home segment recognized favorable loss and LAE reserve development of $15.3 million for the first quarter of 2005, compared to favorable development of $7.3 million for the same period in 2004. Restructuring costs recognized in the Kemper Auto and Home segment were $0.8 million for the first quarter of 2005.
Unitrin Specialty
Earned Premiums in the Unitrin Specialty segment decreased by $8.0 million for the first quarter of 2005, compared to the same period in 2004, due primarily to lower premium volume in personal automobile insurance, partially offset by higher premium volume in commercial automobile insurance. Net Investment Income increased by $1.2 million, due primarily to higher yields on investments and higher levels of investments.
Operating Profit in the Unitrin Specialty segment decreased slightly for the first quarter of 2005, compared to the same period in 2004. Operating profit from personal automobile insurance decreased by $1.6 million due primarily to the lower premium volume, higher losses and LAE and higher insurance expenses as a percentage of earned premiums, partially offset by the higher investment income. Operating profit from commercial automobile insurance increased by $1.3 million for the first quarter of 2005, compared to the same period in 2004, due primarily to the higher premium volume and higher investment income.
Unitrin Direct
Earned Premiums for the first quarter of 2005 were $53.1 million, compared to $42.2 million for the same period in 2004. Earned Premiums increased due to higher volume and higher premium rates. Net Investment Income in the Unitrin Direct segment increased by $0.9 million for the first quarter of 2005, compared to the same period in 2004, due primarily to higher levels of investments and, to a lesser extent, higher yields on investments.
The Unitrin Direct segment reported an Operating Profit of $0.7 million for the first quarter of 2005, compared to an Operating Loss of $3.3 million for the same period in 2004. The Unitrin Direct segment's operating results improved due primarily to lower insurance expenses as a percentage of earned premiums and lower incurred loss and LAE as a percentage of earned premiums. Insurance expenses as a percentage of earned premiums decreased due primarily to improved economies of scale. The lower incurred loss and LAE as a percentage of earned premiums reflect improved premium rate adequacy.
Unitrin Business Insurance
On January 1, 2005, the Company launched its new stand-alone commercial lines business segment - Unitrin Business Insurance. The Unitrin Business Insurance segment includes the commercial lines operations and certain commercial reinsurance programs of the former Multi Lines Insurance segment.
Earned Premiums in the Unitrin Business Insurance segment decreased by $2.6 million for the first quarter of 2005, compared to the same period in 2004. Commercial automobile insurance and commercial property and liability insurance earned premiums decreased due primarily to lower premium volume, partially offset by higher premium rates. Net Investment Income in the Unitrin Business Insurance segment increased by $1.5 million for the first quarter of 2005, compared to the same period in 2004, due to higher yields on investments and, to a lesser extent, higher levels of investments.
Operating Profit in the Unitrin Business Insurance segment increased by $3.5 million for the first quarter of 2005, compared to the same period in 2004, due primarily to lower incurred losses and LAE and the higher net investment income, partially offset by higher insurance expenses partly due to certain restructuring costs. Incurred losses and LAE decreased due to improved underwriting and the favorable effects of reserve development. Reserve development was $4.2 million favorable for the first quarter of 2005, compared to $3.2 million favorable for the same period in 2004. Catastrophe losses and LAE were $0.2 million for the first quarter of 2005, compared to $0.7 million for the same period in 2004. Restructuring costs recognized in the Unitrin Business Insurance segment were $1.1 million for the first quarter of 2005.
Life and Health Insurance
Earned Premiums in the Life and Health Insurance segment increased by $1.2 million for the first quarter of 2005, compared to the same period in 2004, due primarily to higher volume of life insurance and higher volume of property insurance sold by the Life and Health Insurance segment's career agents, partially offset by lower volume of accident and health insurance. Net Investment Income in the Life and Health Insurance segment increased by $5.6 million for the first quarter of 2005, compared to the same period in 2004, due primarily to higher levels of investments and higher yields on investments.
Operating Profit in the Life and Health Insurance segment increased by $10.8 million for the first quarter of 2005, compared to the same period in 2004, due primarily to the higher net investment income and lower life insurance policyholders' benefits.
Consumer Finance
Consumer Finance Revenues increased by $2.7 million for the first quarter of 2005, compared to the same period of 2004, due primarily to higher levels of loans outstanding, partially offset by lower loan portfolio interest rates. Operating Profit in the Consumer Finance segment increased by $3.3 million for the first quarter of 2005, compared to the same period of 2004, due primarily to lower provision for loan losses and the higher levels of loans outstanding.
Results for Unitrin, Inc. for the first quarter of 2005 and 2004
are as follows:
Three Months Ended
------------------------
(Dollars and Shares in Millions, March 31, March 31,
Except Per Share Amounts) 2005 2004
----------------------------------------- ----------- -----------
Revenues:
Earned Premiums $615.2 $614.2
Consumer Finance Revenues 52.3 49.6
Net Investment Income 72.0 60.2
Other Income 1.9 2.8
Net Realized Investment Gains 5.7 18.5
----------- -----------
Total Revenues 747.1 745.3
----------- -----------
Expenses:
Policyholders' Benefits and Incurred
Losses and Loss Adjustment Expenses 399.3 423.5
Insurance Expenses 201.1 200.3
Consumer Finance Expenses 39.0 39.6
Interest and Other Expenses 14.6 14.8
----------- -----------
Total Expenses 654.0 678.2
----------- -----------
Income before Income Taxes and
Equity in Net Income (Loss) of Investee 93.1 67.1
Income Tax Expense 27.8 19.0
----------- -----------
Income before Equity in Net
Income (Loss) of Investee 65.3 48.1
Equity in Net Income (Loss) of Investee 2.6 (0.1)
----------- -----------
Net Income $67.9 $48.0
=========== ===========
Net Income Per Share $0.99 $0.71
=========== ===========
Net Income Per Share Assuming Dilution $0.98 $0.70
=========== ===========
Weighted Average Common Shares
Outstanding 68.9 68.0
=========== ===========
Weighted Average Common Shares
and Equivalent Shares Outstanding
Assuming Dilution 69.4 68.6
=========== ===========
Business segment revenues for the first quarter of 2005 and 2004
are as follows:
Three Months Ended
------------------------
March 31, March 31,
(Dollars in Millions) 2005 2004
--------------------------------------- ----------- -----------
Revenues:
Segment Revenues:
Kemper Auto and Home:
Earned Premiums $233.1 $233.6
Net Investment Income 12.0 8.5
Other Income 0.2 1.2
----------- -----------
Total Kemper Auto and Home 245.3 243.3
----------- -----------
Unitrin Specialty:
Earned Premiums 113.9 121.9
Net Investment Income 5.3 4.1
----------- -----------
Total Unitrin Specialty 119.2 126.0
----------- -----------
Unitrin Direct:
Earned Premiums 53.1 42.2
Net Investment Income 2.3 1.4
----------- -----------
Total Unitrin Direct 55.4 43.6
----------- -----------
Unitrin Business Insurance:
Earned Premiums 47.2 49.8
Net Investment Income 7.6 6.1
----------- -----------
Total Unitrin Business Insurance 54.8 55.9
----------- -----------
Life and Health Insurance:
Earned Premiums 167.9 166.7
Net Investment Income 40.2 34.6
Other Income 1.1 0.9
----------- -----------
Total Life and Health Insurance 209.2 202.2
----------- -----------
Consumer Finance 52.3 49.6
----------- -----------
Total Segment Revenues 736.2 720.6
Unallocated Dividend Income 5.1 5.9
Net Realized Investment Gains 5.7 18.5
Other 0.1 0.3
----------- -----------
Total Revenues $747.1 $745.3
=========== ===========
Business segment Operating Profit for the first quarter of 2005
and 2004 is as follows:
Three Months Ended
------------------------
March 31, March 31,
(Dollars in Millions) 2005 2004
------------------------------------------ ----------- -----------
Segment Operating Profit (Loss):
Kemper Auto and Home $28.5 $11.5
Unitrin Specialty 10.6 10.8
Unitrin Direct 0.7 (3.3)
Unitrin Business Insurance 8.7 5.2
Life and Health Insurance 27.5 16.7
Consumer Finance 13.3 10.0
----------- -----------
Total Segment Operating Profit 89.3 50.9
Unallocated Dividend Income 5.1 5.9
Net Realized Investment Gains 5.7 18.5
Other Expense, Net (7.0) (8.2)
----------- -----------
Income before Income Taxes and Equity
in Net Income (Loss) of Investee $93.1 $67.1
=========== ===========
Business segment Net Income for the first quarter of 2005 and 2004
is as follows:
Three Months Ended
-------------------------
March 31, March 31,
(Dollars in Millions) 2005 2004
------------------------------------------ ----------- -----------
Segment Net Income (Loss):
Kemper Auto and Home $20.5 $8.9
Unitrin Specialty 7.7 7.8
Unitrin Direct 0.9 (1.8)
Unitrin Business Insurance 6.9 4.4
Life and Health Insurance 17.9 11.1
Consumer Finance 7.7 5.7
----------- -----------
Total Segment Net Income 61.6 36.1
Net Income (Loss) From:
Unallocated Dividend Income 4.5 5.2
Net Realized Investment Gains 3.7 12.0
Other Expense, Net (4.5) (5.2)
----------- -----------
Income Before Equity in
Net Income (Loss) of Investee 65.3 48.1
Equity in Net Income (Loss) of Investee 2.6 (0.1)
----------- -----------
Net Income $67.9 $48.0
=========== ===========
Corporate Investments
After adjusting for first quarter 2005 sales of a portion of the Company's investment in Baker Hughes common stock, the fair value of Unitrin's Corporate Investments (Northrop Grumman preferred and common stock and the common stocks of Baker Hughes and UNOVA, Inc.) decreased by $63.0 million for the first quarter of 2005. The changes in fair values of Unitrin's Corporate Investments are summarized below:
Holding
Gain Fair
Fair (Loss) Value
Value Arising March
(Dollars in Millions) Dec. 31, During 31,
2004 Period Dispositions 2005
----------------------------- --------- -------- ------------ -------
Northrop Preferred Stock $ 234.3 $ (3.6) $ - $230.7
Northrop Common Stock 430.3 (3.0) - 427.3
Baker Hughes Common Stock 48.4 2.3 (3.9) 46.8
UNOVA Common Stock 320.1 (58.7) - 261.4
--------- -------- ------------ -------
Total Fair Value of
Corporate Investments $1,033.1 $ (63.0) $ (3.9) $966.2
========= ======== ============ =======
This press release may contain or incorporate by reference information that includes or is based upon forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements give expectations or forecasts of future events. The reader can identify these statements by the fact that they do not relate strictly to historical or current facts. They use words such as "believe(s)," "goal(s)," "target(s)," "estimate(s)," "anticipate(s)," "forecast(s)," "project(s)," "plan(s)," "intend(s)," "expect(s)," "might," "may" and other words and terms of similar meaning in connection with a discussion of future operating or financial performance. In particular, these include statements relating to future actions, prospective services or products, future performance or results of current and anticipated services or products, sales efforts, expenses, the outcome of contingencies such as legal proceedings, trends in operations and financial results.
Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this press release. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining the Company's actual future results. These statements are based on current expectations and the current economic environment. They involve a number of risks and uncertainties that are difficult to predict. These statements are not guarantees of future performance; actual results could differ materially from those expressed or implied in the forward-looking statements. Among factors that could cause actual results to differ materially are:
-- Changes in general economic conditions, including performance of financial markets, interest rates, and unemployment rates and the inflationary impact on claims;
-- Heightened competition, including with respect to pricing, entry of new competitors and the development of new products by new and existing competitors;
-- The number and severity of insurance claims (including those associated with catastrophe losses) and their impact on the adequacy of loss reserves;
-- The inflationary impact of the availability of labor and materials on repair and reconstruction costs;
-- Changes in the pricing or availability of reinsurance;
-- Changes in the financial condition of reinsurers and amounts recoverable therefrom;
-- Changes in industry trends;
-- Regulatory approval of insurance rates, policy forms, license applications and similar matters;
-- Governmental actions (including new laws or regulations or court decisions interpreting existing laws and regulations or policy provisions) and adverse judgments in litigation to which the Company or its subsidiaries are parties;
-- Regulatory, accounting or tax changes that may affect the cost of, or demand for, the Company's products or services;
-- Changes in distribution channels, methods or costs resulting from changes in laws or regulations, lawsuits or market forces;
-- Changes in ratings by credit rating agencies and/or A.M. Best Co., Inc.;
-- Realization of economies of scale;
-- Absolute and relative performance of the Company's products or services;
-- Ability to maintain uninterrupted operation of facilities and business operations; and
-- Other risks and uncertainties described from time to time in the Company's filings with the Securities and Exchange Commission ("SEC").
No assurances can be given that the results contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. The Company assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this press release. The reader is advised, however, to consult any further disclosures the Company makes on related subjects in filings made with the SEC.
Friday, April 29, 2005
Thursday, April 28, 2005
Medical costs prove a burden even for some with insurance
By Julie Appleby, USA TODAY
Think your health insurance has you covered? Think again.
Even insured workers can find themselves on the hook for thousands of dollars, often at a time when illness has decreased their income.
Few workers realize the limits of their insurance until the bills start coming for: policies that don't cover rehabilitation care or limit it to a few visits; expensive drugs that come with a 20% charge, rather than a $20 co-pay; separate deductibles for drugs and medical care; doctors at "in-network" hospitals that aren't members of the insurer's network, leaving patients vulnerable to thousands of dollars in bills; annual "out-of-pocket maximums" that aren't always true ceilings on expenses.
Such costs can quickly add up. A drug co-payment of 20%, for example, could cost thousands a year for patients taking some cancer drugs. Avastin, a colon cancer drug, recently went on the market at a price of more than $4,000 a month. Erbitux, another colon cancer treatment, can cost $12,000 or more for a month's treatment. Gleevec, for leukemia, is more than $2,000 a month.
That's the reality for Rita Wirsch, a 55-year-old clerical worker in Hamilton, Ohio, who is struggling to pay off about $10,000 in medical bills that her insurance did not cover. The total added up over four years, bill by bill, in amounts from $25 to more than $400 a pop. Three months on disability pay this year after surgery put her further behind.
"I thank God every day that I have insurance," says Wirsch. "But there's a problem in the U.S. for hard-working people."
And it isn't likely to change.
More workers are facing larger medical bills as employers increase what they must pay for doctor visits, drugs and hospital care in an effort to control health care costs. Some employers are embracing high-deductible policies — requiring workers to pay $1,000 or more a year in expenses before insurance kicks in. Such policies are also common for the self-employed, who buy their own insurance, because premiums are generally lower.
Shifting more costs to the insured is having ripple effects. Hospitals are collecting more upfront from patients, after being left with bad debt by insured patients who failed to pay their deductibles. Insured patients are also attracting charity efforts: The Patient Advocate Foundation, for example, has a program aimed solely at helping insured patients make the co-payments on their prescription drugs. The group pays up to $2,500 annually toward drug co-payments for qualified patients with four conditions: the eye disease macular degeneration, and cancers of the breast, lung or prostate.
"The fully insured middle-class people who become ill with critical or life-threatening illnesses, it can completely ruin their financial health," says Beth Darnley, chief program officer for the foundation.
Limits of insurance
Many Americans are not prepared. Whether struggling to meet mortgage costs, college tuition and other expenses — or simply buying all the latest gadgets — few are saving enough to weather unexpected bad times. The personal savings rate, the difference between what people earn and what they spend, fell for the second-straight year in 2004 to the lowest level since 1934.
But it isn't just catastrophic illness or accident that leads to financial stress. For some, ordinary medical problems can lead to seemingly insurmountable bills.
"Families are paying more and more for health insurance that covers them less and less," says Elizabeth Warren, a Harvard professor and co-author of a recent study of bankruptcy filings in five states. The study concluded that medical bills contributed to half of all personal bankruptcies.
The bills, coupled with a low savings rate for most American families, tip about 1 million into bankruptcy each year, Warren says. The average out-of-pocket medical debt for those who filed is about $12,000, and 68% had health insurance at the time of their bankruptcy filing.
Things might soon get tougher for some families. Federal bankruptcy legislation that goes into effect in six months could require many people to repay all or part of their debts, including medical bills.
Some have questioned the bankruptcy study findings. Greg Scandlen a policy analyst with the Galen Institute, a free-market health care research group, says the definition of medical bankruptcy in the study was so broad that the results are not useful in determining whether medical bills were the main source of families' financial troubles or a small part.
"I'm not denying at all that there's a problem out there, but this study doesn't tell us anything about the dimensions of that problem," Scandlen said.
Several thousand dollars in charges might not sink a highly paid worker, but the middle class and those on the lower end of the pay scale can find themselves spending a significant share of their income on medical care.
A recent report by the Center for Studying Health System Change found that the proportion of low-income, chronically ill patients who were insured but still spent more than 5% of their income on health costs rose from 28% to 42% from 2001 to 2003. The study defined low income as being below 200% of the poverty line, or about $36,800 for a family of four in 2003.
"Bankruptcy is just the tip of the iceberg: 29 million Americans are in medical debt," says Jennifer Edwards of the Commonwealth Fund, a private foundation that supports research on health and social issues.
A recent Commonwealth study defined those in medical debt as paying bills to health care providers or having large credit card debt or loans against their homes related to medical costs.
Of those, 70% were insured when they got the health care that put them in debt, and nearly half had used up all or most of their savings, Edwards said.
Stretching to pay bills
As do many families, Wirsch recently tapped her retirement fund to help pay the bills.
She has a good clerical job at a Fortune 500 company, earning nearly $13 an hour. And it comes with insurance: a policy with a $2,000 annual deductible for medical and hospital care. Starting this year, the plan added a separate $2,000 deductible for drugs.
This year, she had to take three months off, living on a reduced income from disability payments, while recovering from surgery.
The surgery bills are now added to what she owes from past medical treatments. Her share of the surgeon's bill: $480. Bills for physical therapy: $155. Prescription refills: $25 to $40. She takes 14 pills a day for diabetes, fibromyalgia, which is a painful muscle condition, and intestinal problems. She asks for free samples from her doctor to help make ends meet.
She now has $5,800 in credit card debt that she says is all from medical bills. Wirsch says she's making payments on the card, sometimes $10 a month: "That will take me till I'm 100 to pay off."
Still, she appreciates her health insurance and knows her employer has paid far more than she has.
"Since I started working there 14 years ago, they've probably paid out over $80,000 in medical bills for me," says Wirsch.
Warren says that many of the people in her study of bankruptcies were dealing with non-catastrophic medical problems.
In her study, one man, who was not named, filed for bankruptcy after hurting his knee in a fall. At first he wasn't worried because he had insurance, which paid 80% of his hospital and surgeon's bills. But his coverage left him responsible for physical therapy costs, crutches, braces and all drugs.
"His out-of-pocket expenses ran to $12,000," says Warren. "It wasn't medically catastrophic, but it was financially catastrophic."
For Andrea Talaga, 42, of Bolingbrook, Ill., medical and financial troubles are becoming catastrophic. She filed for Chapter 7 bankruptcy protection in 1992 and says she might have to again.
Talaga, a lab technician at a hospital, says she spends $1,225 a month on her share of prescription drugs for her family. She's diabetic. Her husband, a security officer at a hospital, has high blood pressure and high cholesterol. Both her sons are asthmatic, and one was just diagnosed with major depression. One son's asthma medication isn't covered by her insurance: It costs $225 for a 28-dose pack, and he usually uses two packs a month.
She says her husband's $40,000 salary covers the mortgage and home expenses. Her $25,000 goes for food and medical costs.
"I can't not take my insulin. My husband can't go without his high blood pressure medicine," she says. "My son definitely cannot go without any of his medicine."
She recently learned her health plan limits mental-health counseling to 20 visits a year. Her son will soon exhaust those benefits.
"How can you cure someone in 20 days if they have mental health issues as severe as my son's?"
She doesn't have a solution.
"I wish my employer would back me up and look at people like us," she says. "I know they still pay a lot for employees, but in the long run, they aren't looking at the whole picture."
Think your health insurance has you covered? Think again.
Even insured workers can find themselves on the hook for thousands of dollars, often at a time when illness has decreased their income.
Few workers realize the limits of their insurance until the bills start coming for: policies that don't cover rehabilitation care or limit it to a few visits; expensive drugs that come with a 20% charge, rather than a $20 co-pay; separate deductibles for drugs and medical care; doctors at "in-network" hospitals that aren't members of the insurer's network, leaving patients vulnerable to thousands of dollars in bills; annual "out-of-pocket maximums" that aren't always true ceilings on expenses.
Such costs can quickly add up. A drug co-payment of 20%, for example, could cost thousands a year for patients taking some cancer drugs. Avastin, a colon cancer drug, recently went on the market at a price of more than $4,000 a month. Erbitux, another colon cancer treatment, can cost $12,000 or more for a month's treatment. Gleevec, for leukemia, is more than $2,000 a month.
That's the reality for Rita Wirsch, a 55-year-old clerical worker in Hamilton, Ohio, who is struggling to pay off about $10,000 in medical bills that her insurance did not cover. The total added up over four years, bill by bill, in amounts from $25 to more than $400 a pop. Three months on disability pay this year after surgery put her further behind.
"I thank God every day that I have insurance," says Wirsch. "But there's a problem in the U.S. for hard-working people."
And it isn't likely to change.
More workers are facing larger medical bills as employers increase what they must pay for doctor visits, drugs and hospital care in an effort to control health care costs. Some employers are embracing high-deductible policies — requiring workers to pay $1,000 or more a year in expenses before insurance kicks in. Such policies are also common for the self-employed, who buy their own insurance, because premiums are generally lower.
Shifting more costs to the insured is having ripple effects. Hospitals are collecting more upfront from patients, after being left with bad debt by insured patients who failed to pay their deductibles. Insured patients are also attracting charity efforts: The Patient Advocate Foundation, for example, has a program aimed solely at helping insured patients make the co-payments on their prescription drugs. The group pays up to $2,500 annually toward drug co-payments for qualified patients with four conditions: the eye disease macular degeneration, and cancers of the breast, lung or prostate.
"The fully insured middle-class people who become ill with critical or life-threatening illnesses, it can completely ruin their financial health," says Beth Darnley, chief program officer for the foundation.
Limits of insurance
Many Americans are not prepared. Whether struggling to meet mortgage costs, college tuition and other expenses — or simply buying all the latest gadgets — few are saving enough to weather unexpected bad times. The personal savings rate, the difference between what people earn and what they spend, fell for the second-straight year in 2004 to the lowest level since 1934.
But it isn't just catastrophic illness or accident that leads to financial stress. For some, ordinary medical problems can lead to seemingly insurmountable bills.
"Families are paying more and more for health insurance that covers them less and less," says Elizabeth Warren, a Harvard professor and co-author of a recent study of bankruptcy filings in five states. The study concluded that medical bills contributed to half of all personal bankruptcies.
The bills, coupled with a low savings rate for most American families, tip about 1 million into bankruptcy each year, Warren says. The average out-of-pocket medical debt for those who filed is about $12,000, and 68% had health insurance at the time of their bankruptcy filing.
Things might soon get tougher for some families. Federal bankruptcy legislation that goes into effect in six months could require many people to repay all or part of their debts, including medical bills.
Some have questioned the bankruptcy study findings. Greg Scandlen a policy analyst with the Galen Institute, a free-market health care research group, says the definition of medical bankruptcy in the study was so broad that the results are not useful in determining whether medical bills were the main source of families' financial troubles or a small part.
"I'm not denying at all that there's a problem out there, but this study doesn't tell us anything about the dimensions of that problem," Scandlen said.
Several thousand dollars in charges might not sink a highly paid worker, but the middle class and those on the lower end of the pay scale can find themselves spending a significant share of their income on medical care.
A recent report by the Center for Studying Health System Change found that the proportion of low-income, chronically ill patients who were insured but still spent more than 5% of their income on health costs rose from 28% to 42% from 2001 to 2003. The study defined low income as being below 200% of the poverty line, or about $36,800 for a family of four in 2003.
"Bankruptcy is just the tip of the iceberg: 29 million Americans are in medical debt," says Jennifer Edwards of the Commonwealth Fund, a private foundation that supports research on health and social issues.
A recent Commonwealth study defined those in medical debt as paying bills to health care providers or having large credit card debt or loans against their homes related to medical costs.
Of those, 70% were insured when they got the health care that put them in debt, and nearly half had used up all or most of their savings, Edwards said.
Stretching to pay bills
As do many families, Wirsch recently tapped her retirement fund to help pay the bills.
She has a good clerical job at a Fortune 500 company, earning nearly $13 an hour. And it comes with insurance: a policy with a $2,000 annual deductible for medical and hospital care. Starting this year, the plan added a separate $2,000 deductible for drugs.
This year, she had to take three months off, living on a reduced income from disability payments, while recovering from surgery.
The surgery bills are now added to what she owes from past medical treatments. Her share of the surgeon's bill: $480. Bills for physical therapy: $155. Prescription refills: $25 to $40. She takes 14 pills a day for diabetes, fibromyalgia, which is a painful muscle condition, and intestinal problems. She asks for free samples from her doctor to help make ends meet.
She now has $5,800 in credit card debt that she says is all from medical bills. Wirsch says she's making payments on the card, sometimes $10 a month: "That will take me till I'm 100 to pay off."
Still, she appreciates her health insurance and knows her employer has paid far more than she has.
"Since I started working there 14 years ago, they've probably paid out over $80,000 in medical bills for me," says Wirsch.
Warren says that many of the people in her study of bankruptcies were dealing with non-catastrophic medical problems.
In her study, one man, who was not named, filed for bankruptcy after hurting his knee in a fall. At first he wasn't worried because he had insurance, which paid 80% of his hospital and surgeon's bills. But his coverage left him responsible for physical therapy costs, crutches, braces and all drugs.
"His out-of-pocket expenses ran to $12,000," says Warren. "It wasn't medically catastrophic, but it was financially catastrophic."
For Andrea Talaga, 42, of Bolingbrook, Ill., medical and financial troubles are becoming catastrophic. She filed for Chapter 7 bankruptcy protection in 1992 and says she might have to again.
Talaga, a lab technician at a hospital, says she spends $1,225 a month on her share of prescription drugs for her family. She's diabetic. Her husband, a security officer at a hospital, has high blood pressure and high cholesterol. Both her sons are asthmatic, and one was just diagnosed with major depression. One son's asthma medication isn't covered by her insurance: It costs $225 for a 28-dose pack, and he usually uses two packs a month.
She says her husband's $40,000 salary covers the mortgage and home expenses. Her $25,000 goes for food and medical costs.
"I can't not take my insulin. My husband can't go without his high blood pressure medicine," she says. "My son definitely cannot go without any of his medicine."
She recently learned her health plan limits mental-health counseling to 20 visits a year. Her son will soon exhaust those benefits.
"How can you cure someone in 20 days if they have mental health issues as severe as my son's?"
She doesn't have a solution.
"I wish my employer would back me up and look at people like us," she says. "I know they still pay a lot for employees, but in the long run, they aren't looking at the whole picture."
Auto Insurance Verification Bill Passed by Texas Senate
April 28, 2005
Senate Bill 1670, which addresses the problem of uninsured drivers in Texas, was passed by the state Senate. The bill by Sen. Todd Staples, R-Palestine, calls for a $1 fee on motor vehicle license renewals to pay for an insurance verification program that would be operated by the Texas Department of Public Safety.
In the Senate's analysis of the bill, it was reported that 20 percent of Texas drivers do not have auto insurance, according to the Department of Public Safety. The DPS has issued over 195,000 tickets to drivers in Texas for lack of insurance in the past year.
Under the bill, the enforcement program would be developed jointly by the DPS, the Texas Department of Insurance and the Texas Department of Transportation. Some 27 other states have implemented insurance verification programs.
Senate Bill 1670, which addresses the problem of uninsured drivers in Texas, was passed by the state Senate. The bill by Sen. Todd Staples, R-Palestine, calls for a $1 fee on motor vehicle license renewals to pay for an insurance verification program that would be operated by the Texas Department of Public Safety.
In the Senate's analysis of the bill, it was reported that 20 percent of Texas drivers do not have auto insurance, according to the Department of Public Safety. The DPS has issued over 195,000 tickets to drivers in Texas for lack of insurance in the past year.
Under the bill, the enforcement program would be developed jointly by the DPS, the Texas Department of Insurance and the Texas Department of Transportation. Some 27 other states have implemented insurance verification programs.
Lack of health insurance can lead to sick economy
UCLA researchers say not having coverage can lead to school absences and a higher number of dropouts.
By Lisa Mascaro
THE ASSOCIATED PRESS
Nearly one-fourth of California's Latino children don't have health insurance, potentially leading to missed school days and a downward spiral that can have enormous implications on the state's economic prosperity, UCLA researchers said this week.
As children grow up without vaccinations, physical checkups and routine exams -- some as young as 5 need root-canal surgery because they've never been to a dentist -- their future productivity can be diminished, according to a study by UCLA Center for the Study of Latino Health and Culture.
"Given that we need to be preparing the work force of tomorrow, we're not dealing with just a Latino issue. It's a work force issue," said David E. Hayes-Bautista, director of the center and a study author.
"Even though these things are concentrated as Latino issues, they are societal. They impact all of us," he said. "It's the educational preparation of that labor force in the future. We need to be making these education decisions and labor decisions now."
The study's authors surveyed available data and literature to "connect the dots" and show the damage that can unfold without medical care for the state's estimated 3.7 million Latino children under 18.
Children are likely to miss school when they're sick, the study said, noting that in the Los Angeles Unified School District, where 70 percent of the students are Latino, kids miss an average of 27 days of school a year.
Without higher education, U.S.-born Latinos are more likely to rely on public assistance and will have lower earning potential, less chance of homeownership and will be less likely to vote.
"We know what the costs of health insurance are, but equal attention needs to be devoted to the costs of not having health insurance," the authors wrote.
Next week is "Cover the Uninsured Week," and many clinics and foundations are sponsoring events to get the word out that free and low-cost care is available for many of the county's 235,000 uninsured children.
"You just see a lot of families who have gone without insurance for so long," said Julie Cha, a spokeswoman for the Northeast Valley Health Corp., a nonprofit center that operates facilities in the San Fernando Valley.
"A lot of them could end up with chronic diseases ... from obesity to diabetes to asthma. These can become chronic lifelong problems that they carry into adulthood," she said.
Thousands of youngsters up to 5 could be receiving care through First5 LA, the program funded by the tobacco sales tax.
And last year, L.A. Care Health Plan launched a massive effort to provide care to older kids through a $128 million effort. With nearly 35,000 kids ages 6-18 now signed up, program operators expect to start a waiting list next month.
Under both programs, kids can get medical, dental, vision and emergency room care, as well as prescription drug coverage. The programs generally cost up to $6 a month per child, with a $5 co-payment for most services. Families generally must earn less than $48,000 annually for a family of three to qualify.
L.A. Care has $4 million in rebates for families that are paying for their own medical insurance -- giving families $20 a month, up to $100, toward the costs of their insurance.
"We feel very strongly that kids deserve a good start in life ... We believe preventive health care is preferable and much less expensive and psychologically costly on the members than ending up in an emergency room situation," said Andrea Van Hook, spokeswoman for L.A. Care Health Plan.
By Lisa Mascaro
THE ASSOCIATED PRESS
Nearly one-fourth of California's Latino children don't have health insurance, potentially leading to missed school days and a downward spiral that can have enormous implications on the state's economic prosperity, UCLA researchers said this week.
As children grow up without vaccinations, physical checkups and routine exams -- some as young as 5 need root-canal surgery because they've never been to a dentist -- their future productivity can be diminished, according to a study by UCLA Center for the Study of Latino Health and Culture.
"Given that we need to be preparing the work force of tomorrow, we're not dealing with just a Latino issue. It's a work force issue," said David E. Hayes-Bautista, director of the center and a study author.
"Even though these things are concentrated as Latino issues, they are societal. They impact all of us," he said. "It's the educational preparation of that labor force in the future. We need to be making these education decisions and labor decisions now."
The study's authors surveyed available data and literature to "connect the dots" and show the damage that can unfold without medical care for the state's estimated 3.7 million Latino children under 18.
Children are likely to miss school when they're sick, the study said, noting that in the Los Angeles Unified School District, where 70 percent of the students are Latino, kids miss an average of 27 days of school a year.
Without higher education, U.S.-born Latinos are more likely to rely on public assistance and will have lower earning potential, less chance of homeownership and will be less likely to vote.
"We know what the costs of health insurance are, but equal attention needs to be devoted to the costs of not having health insurance," the authors wrote.
Next week is "Cover the Uninsured Week," and many clinics and foundations are sponsoring events to get the word out that free and low-cost care is available for many of the county's 235,000 uninsured children.
"You just see a lot of families who have gone without insurance for so long," said Julie Cha, a spokeswoman for the Northeast Valley Health Corp., a nonprofit center that operates facilities in the San Fernando Valley.
"A lot of them could end up with chronic diseases ... from obesity to diabetes to asthma. These can become chronic lifelong problems that they carry into adulthood," she said.
Thousands of youngsters up to 5 could be receiving care through First5 LA, the program funded by the tobacco sales tax.
And last year, L.A. Care Health Plan launched a massive effort to provide care to older kids through a $128 million effort. With nearly 35,000 kids ages 6-18 now signed up, program operators expect to start a waiting list next month.
Under both programs, kids can get medical, dental, vision and emergency room care, as well as prescription drug coverage. The programs generally cost up to $6 a month per child, with a $5 co-payment for most services. Families generally must earn less than $48,000 annually for a family of three to qualify.
L.A. Care has $4 million in rebates for families that are paying for their own medical insurance -- giving families $20 a month, up to $100, toward the costs of their insurance.
"We feel very strongly that kids deserve a good start in life ... We believe preventive health care is preferable and much less expensive and psychologically costly on the members than ending up in an emergency room situation," said Andrea Van Hook, spokeswoman for L.A. Care Health Plan.
Wednesday, April 27, 2005
Can the Insurance Industry Withstand a Major Catastrophe
Press Release
LOS ANGELES--(BUSINESS WIRE)--April 26, 2005--In a speech to business leaders today at Town Hall Los Angeles, The Allstate Corporation (NYSE:ALL) Chairman, President and Chief Executive Officer Ed Liddy called for greater public and private sector dialogue toward protecting consumers in the wake of natural disaster, the abuse that exists in the lawsuit industry as well as the importance of asbestos and workers compensation reform.
The devastation of the tsunami destruction in Asia and east India, the wildfires that ravaged Southern California in 2003 and the Florida hurricanes demonstrate the devastation that can occur as a result of a natural disaster. Liddy warns that the current system is not prepared to handle the economic impact of a large natural disaster in California. He suggests that government and businesses work together to protect homeowners, only 14 percent of whom are covered by earthquake insurance.
"One recent model indicates damage from a repeat of the 1906 San Francisco earthquake would cost about $400 billion in economic losses," Liddy told business leaders at Town Hall Los Angeles. "With only 14 percent of California homeowners armed with earthquake insurance, the concern grows. Uninsured consumers whose life savings are tied up in homes and businesses would potentially be left with nothing."
In order to remedy the situation Liddy called for a greater dialogue and sharing of resources among stakeholders including governments, banks and insurance providers. Mr. Liddy challenged other industries to become involved, and reiterated that, "our industry stands ready to do its part."
Liddy also discussed the need for class action reform, and advocated using the momentum of recent federal and state government victories to abolish civil lawsuit abuse. One of his missions is "to dismantle a veritable lawsuit abuse industry that has imposed ever-increasing burdens on American businesses and consumers."
Liddy's speech concluded with the issue of asbestos and medical malpractice reforms. As many more American workers are expected to suffer from health issues caused by asbestos, he stressed the need to offer a fair solution to both victims and companies which reduce transaction costs, preserve resources and provide predictability to industries that eliminated the use of asbestos decades ago.
Following the speech, Mr. Liddy led a question and answer session with nine Crenshaw High School students participating in the Southern California Junior Achievement program. The session provided students with an opportunity to be exposed to and ask questions about the business world.
LOS ANGELES--(BUSINESS WIRE)--April 26, 2005--In a speech to business leaders today at Town Hall Los Angeles, The Allstate Corporation (NYSE:ALL) Chairman, President and Chief Executive Officer Ed Liddy called for greater public and private sector dialogue toward protecting consumers in the wake of natural disaster, the abuse that exists in the lawsuit industry as well as the importance of asbestos and workers compensation reform.
The devastation of the tsunami destruction in Asia and east India, the wildfires that ravaged Southern California in 2003 and the Florida hurricanes demonstrate the devastation that can occur as a result of a natural disaster. Liddy warns that the current system is not prepared to handle the economic impact of a large natural disaster in California. He suggests that government and businesses work together to protect homeowners, only 14 percent of whom are covered by earthquake insurance.
"One recent model indicates damage from a repeat of the 1906 San Francisco earthquake would cost about $400 billion in economic losses," Liddy told business leaders at Town Hall Los Angeles. "With only 14 percent of California homeowners armed with earthquake insurance, the concern grows. Uninsured consumers whose life savings are tied up in homes and businesses would potentially be left with nothing."
In order to remedy the situation Liddy called for a greater dialogue and sharing of resources among stakeholders including governments, banks and insurance providers. Mr. Liddy challenged other industries to become involved, and reiterated that, "our industry stands ready to do its part."
Liddy also discussed the need for class action reform, and advocated using the momentum of recent federal and state government victories to abolish civil lawsuit abuse. One of his missions is "to dismantle a veritable lawsuit abuse industry that has imposed ever-increasing burdens on American businesses and consumers."
Liddy's speech concluded with the issue of asbestos and medical malpractice reforms. As many more American workers are expected to suffer from health issues caused by asbestos, he stressed the need to offer a fair solution to both victims and companies which reduce transaction costs, preserve resources and provide predictability to industries that eliminated the use of asbestos decades ago.
Following the speech, Mr. Liddy led a question and answer session with nine Crenshaw High School students participating in the Southern California Junior Achievement program. The session provided students with an opportunity to be exposed to and ask questions about the business world.
Hawaii Among Best For Health Insurance
WASHINGTON -- Minnesota and Hawaii had the lowest percentage of adults without health insurance of any state, according to a national study released Tuesday by the Robert Wood Johnson Foundation.
The states with the lowest uninsured rates among all adults were Minnesota at 8.3 percent, Hawaii at 9.8 percent and Delaware at 10.2 percent.
Minnesota and Hawaii also fared best when it came to the lowest uninsured rates for adults with jobs. Minnesota came in at 6.9 percent, and Hawaii posted an 8.5 percent.
The study uses data from the Centers for Disease Control and Prevention for 2003.
States with the highest rate of uninsured adults were Texas at 30.7 percent, Louisiana at 26.4 percent and New Mexico at 26 percent.
The states with the lowest uninsured rates among all adults were Minnesota at 8.3 percent, Hawaii at 9.8 percent and Delaware at 10.2 percent.
Minnesota and Hawaii also fared best when it came to the lowest uninsured rates for adults with jobs. Minnesota came in at 6.9 percent, and Hawaii posted an 8.5 percent.
The study uses data from the Centers for Disease Control and Prevention for 2003.
States with the highest rate of uninsured adults were Texas at 30.7 percent, Louisiana at 26.4 percent and New Mexico at 26 percent.
Latino Kids lack Health Insurance
Void in coverage threat to state's economic prosperity, study says
By Lisa Mascaro, Staff Writer
Nearly one-fourth of California's Latino children don't have health insurance, potentially leading to missed school days and a downward spiral that can have enormous implications on the state's economic prosperity, UCLA researchers said Tuesday.
As kids grow up without vaccinations, physical checkups and routine exams -- some children as young as 5 need root-canal surgery because they've never seen a dentist -- their future productivity can be diminished, according to the study released by the UCLA Center for the Study of Latino Health and Culture.
"Given that we need to be preparing the work force of tomorrow, we're not dealing with just a Latino issue. It's a work-force issue," said David E. Hayes-Bautista, director of the center and a study author.
"Even though these things are concentrated as Latino issues, they are societal. They impact all of us," he said. "It's the educational preparation of that labor force in the future. We need to be making these education decisions and labor decisions now."
The study's authors surveyed available data and literature to "connect the dots" and show the damage that can unfold without medical care for the state's estimated 3.7 million Latino children under age 18.
Kids are likely to miss school when they're sick, the study said, noting that in the Los Angeles Unified School District, where 70 percent of the students are Latino, kids miss an average of 27 days of school a year.
Without higher education, U.S.-born Latinos are more likely to rely on public assistance and will have lower earning potential, less chance of homeownership and will be less likely to vote.
"We know what the costs of health insurance are, but equal attention needs to be devoted to the costs of not having health insurance," the authors wrote.
Health care providers say they see first-hand the problems youngsters experience because of poor preventive care.
With next week designated as "Cover the Uninsured Week," many clinics and foundations are sponsoring events to get the word out that free and low-cost care is available for many of Los Angeles County's 235,000 uninsured children.
"You just see a lot of families who have gone without insurance for so long," said Julie Cha, a spokeswoman for the Northeast Valley Health Corp., a nonprofit center that operates various facilities in the San Fernando Valley.
"A lot of them could end up with chronic diseases ... from obesity to diabetes to asthma. These can become chronic lifelong problems that they carry into adulthood," she said.
"You can imagine if they're always sick and getting worse and not getting treatment how that would affect the general society. There are just so many ramifications on kids if they don't have access to health care."
Thousands of youngsters up to age 5 could be receiving care through First5 LA, the program funded by the tobacco sales tax.
And last year, L.A. Care Health Plan launched a massive effort to provide care to older kids through a $128 million effort. With nearly 35,000 kids ages 6-18 now signed up, program operators expect to start a waiting list next month.
Under both programs, kids can get medical, dental, vision and emergency room care, as well as prescription drug coverage. The programs generally cost up to $6 a month per child, with a $5 co-payment for most services. Families generally must earn less than $48,000 annually for a family of three to qualify.
L.A. Care also has a pilot program to offer $4 million in rebates for families that are paying for their own medical insurance -- giving families $20 a month, up to $100, toward the costs of their insurance.
"We feel very strongly that kids deserve a good start in life ... We believe preventive health care is preferable and much less expensive and psychologically costly on the members than ending up in an emergency room situation," said Andrea Van Hook, spokeswoman for L.A. Care Health Plan.
"We have statistics about kids who can't see the blackboard, kids as young as 5 having to have root canals. Things like that just should not occur."
The researchers at the University of California, Los Angeles, and experts in the field say a convergence of events in recent years has led to so many kids going without coverage.
In Los Angeles, the economic base has come to include more small and midsize businesses that don't offer health insurance. Plus, the state and county have been forced to cut back funding for health care programs.
But the researchers said studies show gains can be seen as soon as kids are enrolled in health care programs -- starting with better school performance.
They said more statewide efforts to provide health care are needed.
"It would be to the state's advantage," said Hayes-Bautista. "Some counties are ahead of the pack. There's no reason they should have to have their children suffer."
Lisa Mascaro, (818) 713-3761 lisa.mascaro@dailynews.com
AVAILABLE HEALTH CARE
Free and low-cost health care is available for qualifying families:
The Northeast Valley Health Corp.'s San Fernando Health Center will hold a health insurance fair, from 11:30 a.m. to 4 p.m. May 4 at 1600 San Fernando Road. For more information, call (818) 365-8086.
L.A. Care Health Plan, the largest public health care plan in California, offers various free and low-cost health care options, including insurance for children, families and rebates for those paying for their own health insurance. Call (888) 4LAKIDS.
By Lisa Mascaro, Staff Writer
Nearly one-fourth of California's Latino children don't have health insurance, potentially leading to missed school days and a downward spiral that can have enormous implications on the state's economic prosperity, UCLA researchers said Tuesday.
As kids grow up without vaccinations, physical checkups and routine exams -- some children as young as 5 need root-canal surgery because they've never seen a dentist -- their future productivity can be diminished, according to the study released by the UCLA Center for the Study of Latino Health and Culture.
"Given that we need to be preparing the work force of tomorrow, we're not dealing with just a Latino issue. It's a work-force issue," said David E. Hayes-Bautista, director of the center and a study author.
"Even though these things are concentrated as Latino issues, they are societal. They impact all of us," he said. "It's the educational preparation of that labor force in the future. We need to be making these education decisions and labor decisions now."
The study's authors surveyed available data and literature to "connect the dots" and show the damage that can unfold without medical care for the state's estimated 3.7 million Latino children under age 18.
Kids are likely to miss school when they're sick, the study said, noting that in the Los Angeles Unified School District, where 70 percent of the students are Latino, kids miss an average of 27 days of school a year.
Without higher education, U.S.-born Latinos are more likely to rely on public assistance and will have lower earning potential, less chance of homeownership and will be less likely to vote.
"We know what the costs of health insurance are, but equal attention needs to be devoted to the costs of not having health insurance," the authors wrote.
Health care providers say they see first-hand the problems youngsters experience because of poor preventive care.
With next week designated as "Cover the Uninsured Week," many clinics and foundations are sponsoring events to get the word out that free and low-cost care is available for many of Los Angeles County's 235,000 uninsured children.
"You just see a lot of families who have gone without insurance for so long," said Julie Cha, a spokeswoman for the Northeast Valley Health Corp., a nonprofit center that operates various facilities in the San Fernando Valley.
"A lot of them could end up with chronic diseases ... from obesity to diabetes to asthma. These can become chronic lifelong problems that they carry into adulthood," she said.
"You can imagine if they're always sick and getting worse and not getting treatment how that would affect the general society. There are just so many ramifications on kids if they don't have access to health care."
Thousands of youngsters up to age 5 could be receiving care through First5 LA, the program funded by the tobacco sales tax.
And last year, L.A. Care Health Plan launched a massive effort to provide care to older kids through a $128 million effort. With nearly 35,000 kids ages 6-18 now signed up, program operators expect to start a waiting list next month.
Under both programs, kids can get medical, dental, vision and emergency room care, as well as prescription drug coverage. The programs generally cost up to $6 a month per child, with a $5 co-payment for most services. Families generally must earn less than $48,000 annually for a family of three to qualify.
L.A. Care also has a pilot program to offer $4 million in rebates for families that are paying for their own medical insurance -- giving families $20 a month, up to $100, toward the costs of their insurance.
"We feel very strongly that kids deserve a good start in life ... We believe preventive health care is preferable and much less expensive and psychologically costly on the members than ending up in an emergency room situation," said Andrea Van Hook, spokeswoman for L.A. Care Health Plan.
"We have statistics about kids who can't see the blackboard, kids as young as 5 having to have root canals. Things like that just should not occur."
The researchers at the University of California, Los Angeles, and experts in the field say a convergence of events in recent years has led to so many kids going without coverage.
In Los Angeles, the economic base has come to include more small and midsize businesses that don't offer health insurance. Plus, the state and county have been forced to cut back funding for health care programs.
But the researchers said studies show gains can be seen as soon as kids are enrolled in health care programs -- starting with better school performance.
They said more statewide efforts to provide health care are needed.
"It would be to the state's advantage," said Hayes-Bautista. "Some counties are ahead of the pack. There's no reason they should have to have their children suffer."
Lisa Mascaro, (818) 713-3761 lisa.mascaro@dailynews.com
AVAILABLE HEALTH CARE
Free and low-cost health care is available for qualifying families:
The Northeast Valley Health Corp.'s San Fernando Health Center will hold a health insurance fair, from 11:30 a.m. to 4 p.m. May 4 at 1600 San Fernando Road. For more information, call (818) 365-8086.
L.A. Care Health Plan, the largest public health care plan in California, offers various free and low-cost health care options, including insurance for children, families and rebates for those paying for their own health insurance. Call (888) 4LAKIDS.
Tuesday, April 26, 2005
Blue Cross has new tiered plan to rank hospitals
MINNEAPOLIS - Blue Cross and Blue Shield of Minnesota has a new plan that places Minnesota hospitals in two categories, and offers some relief to patients who use the facilities that are deemed less expensive.
Employers could save between 5 and 10 percent of their health care costs if they persuade employees to use hospitals and doctors that Blue Cross designates as "Tier I" care providers. Using the more expensive "Tier II" facilities will cost patients more - their co-payments or coinsurance could be two to three times as high.
The hospital rankings will be released in about two weeks, Blue Cross spokeswoman Jan Hennings said Monday.
The providers and doctors that fall into the Tier II category face a loss in valuable patient traffic from the dominant insurer in the state.
"We want employers to encourage employees to take more interest in the health care choices they make," said Jan Lysen, vice president for network management for Blue Cross and Blue Shield.
Lysen said Tier I providers must meet minimum quality standards and agree to take specific steps to improve quality in various care areas.
Blue Cross, the state's largest health insurer, is evaluating hospitals on seven patient care criteria, including whether they formally track their postoperative infection rates and use a computerized system to order drugs. Other factors include nurse-patient ratio and the presence of a pain management program.
The insurer is also evaluating providers on their costs. The highest-quality providers can still be in the lower tier if the insurers decide they are too expensive.
Information about Blue Cross' two-tier provider structure first appeared as an announcement to state physicians on the Web site of the Minnesota Medical Association.
The association told doctors the system "is likely to spark controversy" and said it is discussing concerns, which it did not specify, with Blue Cross.
The association declined to comment further on Monday.
The two-tiered coverage will be offered to businesses with 51 or more employees starting next year.
HealthPartners has been ranking providers for more than 10 years, and 18 months ago it upgraded the quality and cost elements of its ranking system.
Senior Vice President Scott Aebischer said the HealthPartners plan gives providers incentive to improve on more than 70 factors on which they are judged.
"We've been very transparent about our quality information with our providers," he said. "They know where we stand."
Employers could save between 5 and 10 percent of their health care costs if they persuade employees to use hospitals and doctors that Blue Cross designates as "Tier I" care providers. Using the more expensive "Tier II" facilities will cost patients more - their co-payments or coinsurance could be two to three times as high.
The hospital rankings will be released in about two weeks, Blue Cross spokeswoman Jan Hennings said Monday.
The providers and doctors that fall into the Tier II category face a loss in valuable patient traffic from the dominant insurer in the state.
"We want employers to encourage employees to take more interest in the health care choices they make," said Jan Lysen, vice president for network management for Blue Cross and Blue Shield.
Lysen said Tier I providers must meet minimum quality standards and agree to take specific steps to improve quality in various care areas.
Blue Cross, the state's largest health insurer, is evaluating hospitals on seven patient care criteria, including whether they formally track their postoperative infection rates and use a computerized system to order drugs. Other factors include nurse-patient ratio and the presence of a pain management program.
The insurer is also evaluating providers on their costs. The highest-quality providers can still be in the lower tier if the insurers decide they are too expensive.
Information about Blue Cross' two-tier provider structure first appeared as an announcement to state physicians on the Web site of the Minnesota Medical Association.
The association told doctors the system "is likely to spark controversy" and said it is discussing concerns, which it did not specify, with Blue Cross.
The association declined to comment further on Monday.
The two-tiered coverage will be offered to businesses with 51 or more employees starting next year.
HealthPartners has been ranking providers for more than 10 years, and 18 months ago it upgraded the quality and cost elements of its ranking system.
Senior Vice President Scott Aebischer said the HealthPartners plan gives providers incentive to improve on more than 70 factors on which they are judged.
"We've been very transparent about our quality information with our providers," he said. "They know where we stand."
Auto Insurance Premiums Dropping
Press Release
Cleveland, OH (PRWEB) April 26, 2005 – Insurance.com, the largest online auto insurance agency in the United States, reports a decrease in auto insurance rate quotes depending on geographical region. The company's "2005 First Quarter Auto Insurance Pricing Report" shows a decrease in premiums by nearly 2 percent during the past quarter.
Insurance.com's report highlights the average change in premium quotes on a national basis. The report compares the average premium from the first quarter of 2005 against the average premium for all of 2004 in every state*. The information comes from actual auto insurance quotes consumers received from 12 of the nation's leading companies who participate on Insurance.com's comparative platform. The information was collected from more than 2 million insurance rate quotes provided by Insurance.com to its customers in 2004 and over 500,000 insurance rate quotes collected in the first quarter of 2005.
According to the report, the average consumer received an annual auto insurance quote of $2,304 in the first quarter of 2005. This is a $39, or 1.7 percent, decrease over the average annual premium quoted in 2004. The decrease is a welcome relief after "Insurance.com's 2004 Auto Insurance Pricing Report" highlighted a 6% increase in quotes from 2003 to 2004.
"This report highlights the impact of the competitive pricing pressures insurance carriers have been facing," said Lou Geremia, president of Insurance.com. "Our data, combined with several external measures, indicates that consumers may be able to take advantage of this pricing pressure and benefit from savings not previously available."
Cleveland, OH (PRWEB) April 26, 2005 – Insurance.com, the largest online auto insurance agency in the United States, reports a decrease in auto insurance rate quotes depending on geographical region. The company's "2005 First Quarter Auto Insurance Pricing Report" shows a decrease in premiums by nearly 2 percent during the past quarter.
Insurance.com's report highlights the average change in premium quotes on a national basis. The report compares the average premium from the first quarter of 2005 against the average premium for all of 2004 in every state*. The information comes from actual auto insurance quotes consumers received from 12 of the nation's leading companies who participate on Insurance.com's comparative platform. The information was collected from more than 2 million insurance rate quotes provided by Insurance.com to its customers in 2004 and over 500,000 insurance rate quotes collected in the first quarter of 2005.
According to the report, the average consumer received an annual auto insurance quote of $2,304 in the first quarter of 2005. This is a $39, or 1.7 percent, decrease over the average annual premium quoted in 2004. The decrease is a welcome relief after "Insurance.com's 2004 Auto Insurance Pricing Report" highlighted a 6% increase in quotes from 2003 to 2004.
"This report highlights the impact of the competitive pricing pressures insurance carriers have been facing," said Lou Geremia, president of Insurance.com. "Our data, combined with several external measures, indicates that consumers may be able to take advantage of this pricing pressure and benefit from savings not previously available."
Hawaii Health Insurance heats up
The battle over the healthcare insurance market in Hawaii may reach new heights in a few months.
HMSA and newcomer Summerlin will look to sign up thousands of businesses that are up for renewal this July.
It will be Summerlin's first test in its efforts to become a true player in the islands.
As the two companies square off, we talked to both sides.
As a result of the state prepaid healthcare act, which was enacted during the 1970s, every employee in Hawaii has healthcare insurance.
Through sheer longevity, HMSA has dominated the market, with more than 700,000 members.
For new insurers, Hawaii has been a closed box.
"Because you've had the prepaid act for so many years, everyone has coverage, it's mandated. So from that perspective, there's no pie left," said Jim Dyer, chairman of Summerlin.
Summerlin says it has been doing business in Hawaii for nearly four years and is now prepared to go head-to-head with HMSA.
As a for-profit organization, it will pay the state's 4 percent general excise tax. Nonprofit HMSA does not.
Even so, Summerlin has requested to cut its rates by an average of 20 percent.
"How can the new kid on the block, who has to pay the 4%, be able to reduce their rates by 20% and the others do not? And I would suggest that part of the reason is our monopoly situation," said Sen. Sam Slom, Hawaii Kai.
The state insurance commissioner must decide whether Summerlin can afford the rate cut before he approves it.
If it goes through, it will be an attractive lure this July, when 11,000 small businesses will be up for renewal.
"We are going to be very successful in July and that means that we expect to write hundreds of employer groups with an effective date," Dyer said.
"We will be competitive in the marketplace," said HMSA spokesman Cliff Cisco. "As to how much the new competition will take in the open enrollment periods, we really don't know, and it's not appropriate we speculate."
HMSA says the 11,000 small business groups which are up for renewal represent more than 100,000 people.
HMSA also says it welcomes any new competition as long as it works within the rules as mandated by law.
HMSA and newcomer Summerlin will look to sign up thousands of businesses that are up for renewal this July.
It will be Summerlin's first test in its efforts to become a true player in the islands.
As the two companies square off, we talked to both sides.
As a result of the state prepaid healthcare act, which was enacted during the 1970s, every employee in Hawaii has healthcare insurance.
Through sheer longevity, HMSA has dominated the market, with more than 700,000 members.
For new insurers, Hawaii has been a closed box.
"Because you've had the prepaid act for so many years, everyone has coverage, it's mandated. So from that perspective, there's no pie left," said Jim Dyer, chairman of Summerlin.
Summerlin says it has been doing business in Hawaii for nearly four years and is now prepared to go head-to-head with HMSA.
As a for-profit organization, it will pay the state's 4 percent general excise tax. Nonprofit HMSA does not.
Even so, Summerlin has requested to cut its rates by an average of 20 percent.
"How can the new kid on the block, who has to pay the 4%, be able to reduce their rates by 20% and the others do not? And I would suggest that part of the reason is our monopoly situation," said Sen. Sam Slom, Hawaii Kai.
The state insurance commissioner must decide whether Summerlin can afford the rate cut before he approves it.
If it goes through, it will be an attractive lure this July, when 11,000 small businesses will be up for renewal.
"We are going to be very successful in July and that means that we expect to write hundreds of employer groups with an effective date," Dyer said.
"We will be competitive in the marketplace," said HMSA spokesman Cliff Cisco. "As to how much the new competition will take in the open enrollment periods, we really don't know, and it's not appropriate we speculate."
HMSA says the 11,000 small business groups which are up for renewal represent more than 100,000 people.
HMSA also says it welcomes any new competition as long as it works within the rules as mandated by law.
Monday, April 25, 2005
New Jersey scrapping car insurance caps
The state is eliminating auto insurance caps that affect several Passaic and Bergen County municipalities, but rates in those areas are not guaranteed to rise, state officials said Thursday.
Consumer advocates disagree, saying rates are almost certain to increase for drivers in the primarily urban areas where the caps are now in place.
The caps, which the state established in 1983, prohibit insurance companies from charging more than 35 percent above an insurer's statewide average. The state is divided into 27 territories, 10 of which are protected by the cap.
The Passaic and Bergen municipalities where rates are capped include Paterson, Passaic, Clifton, Lodi, Wallington, Elmwood Park and Garfield.
The caps were put in place in response to rising auto insurance rates in urban areas, which typically have higher rates because accidents and thefts are more common there.
John Dyke, chairman of the NJ Auto Agents Alliance Inc., which represents agents and consumers in the state, said he expects drivers in urban centers will eventually be hit with steep increases.
"The caps were put in place 20 years ago and they were put in place for a reason," said Dyke, also an insurance agent. "Rates were soaring in the urban areas."
But Jaimee Gilmartin, spokeswoman for the state Department of Banking and Insurance, said while it's too early to say what impact removing the caps will have, rates could actually go down. She said that more insurance companies would be likely to do business in the state after caps are eliminated. Competition among those companies could lead to savings for drivers, she said.
"Hopefully, this will spread the burden and balance out the auto insurance market in New Jersey," she said.
But Dyke said auto insurance companies will not compete for the business of all drivers, just the same 25 percent of suburban drivers who have clean driving records and are considered low risk.
It will take at least a year for the caps to be eliminated, Gilmartin said.
The first step toward having the caps dropped began last month when the state adopted new regulations that became effective this week. The next move is for the governor to appoint a commission that will hold public meetings as it draws up a new map establishing regions that will be used as guidelines for insurers to set rates. The state's existing map is more than 50 years old.
Once the new map is created, the department must give its approval before it could be used. Auto insurers could use their own rating maps, but those also need department approval. After the mapping process is done, which is expected to take at least a year, the caps will be lifted.
Whether a driver lives in an urban area is just one of many factors that determine an auto insurance rate, said Ryan Salonia, spokesman for State Farm Insurance in Parsippany.
"It all depends on the individual circumstances of who holds the policy," he said, adding that rates are affected by a driver's record, the number of years he or she has had a license, and the records of other drivers on the policy.
Consumer advocates disagree, saying rates are almost certain to increase for drivers in the primarily urban areas where the caps are now in place.
The caps, which the state established in 1983, prohibit insurance companies from charging more than 35 percent above an insurer's statewide average. The state is divided into 27 territories, 10 of which are protected by the cap.
The Passaic and Bergen municipalities where rates are capped include Paterson, Passaic, Clifton, Lodi, Wallington, Elmwood Park and Garfield.
The caps were put in place in response to rising auto insurance rates in urban areas, which typically have higher rates because accidents and thefts are more common there.
John Dyke, chairman of the NJ Auto Agents Alliance Inc., which represents agents and consumers in the state, said he expects drivers in urban centers will eventually be hit with steep increases.
"The caps were put in place 20 years ago and they were put in place for a reason," said Dyke, also an insurance agent. "Rates were soaring in the urban areas."
But Jaimee Gilmartin, spokeswoman for the state Department of Banking and Insurance, said while it's too early to say what impact removing the caps will have, rates could actually go down. She said that more insurance companies would be likely to do business in the state after caps are eliminated. Competition among those companies could lead to savings for drivers, she said.
"Hopefully, this will spread the burden and balance out the auto insurance market in New Jersey," she said.
But Dyke said auto insurance companies will not compete for the business of all drivers, just the same 25 percent of suburban drivers who have clean driving records and are considered low risk.
It will take at least a year for the caps to be eliminated, Gilmartin said.
The first step toward having the caps dropped began last month when the state adopted new regulations that became effective this week. The next move is for the governor to appoint a commission that will hold public meetings as it draws up a new map establishing regions that will be used as guidelines for insurers to set rates. The state's existing map is more than 50 years old.
Once the new map is created, the department must give its approval before it could be used. Auto insurers could use their own rating maps, but those also need department approval. After the mapping process is done, which is expected to take at least a year, the caps will be lifted.
Whether a driver lives in an urban area is just one of many factors that determine an auto insurance rate, said Ryan Salonia, spokesman for State Farm Insurance in Parsippany.
"It all depends on the individual circumstances of who holds the policy," he said, adding that rates are affected by a driver's record, the number of years he or she has had a license, and the records of other drivers on the policy.
Auto Insurance Company Saves Some Green
SAN FRANCISCO, April 22 /PRNewswire/ -- As a part of its ongoing commitment to safeguarding the environment, Esurance, a direct-to-consumer personal auto insurance company, announced two recent initiatives. In honor of Earth Day, Esurance engaged in a month-long sponsorship of Planet Check, an environmentally themed, one-minute radio program airing on several stations nationwide. Esurance has also engaged in a longer term partnership with San Francisco-based Friends of the Urban Forest, a non-profit organization committed to protecting and expanding San Francisco's urban forest.
John Swigart, Esurance Managing Director and CMO, stated, "We have always been proud of our ability to help the environment by making sound business choices. In our decision-making, we have found that the green-friendly option is almost always the most cost-effective option. Our reliance on technology means that we're a virtually paperless organization. We also chose hybrids where they were available for the vehicles used by our claims adjusters. This helps us keep our costs low, which helps us keep our insurance rates for consumers reasonable. However, this obviously has benefits for the environment. Our customers really can say they save some green with Esurance, both monetarily and environmentally."
However, Esurance realized that it wanted to do even more to lend the planet a helping hand, embarking on its strategy of environmentally focused corporate sponsorships. Swigart added, "When we looked at the environmental benefits already inherent to our operations, we knew we could do even more to create environmental benefits. To help spread the important message of environmental responsibility, we sponsored Planet Check for the month. In terms of the paper we are still required to use in our operations, we wanted to plant trees to help offset the negative environmental impact arising from that. That's why we have started to work with Friends of the Urban Forest."
Planet Check's CEO, Mo Mellady, explained, "We are honored to have forward-thinking companies like Esurance on board helping us spread the green love! Thanks to earth-friendly sponsors like Esurance, we continue to get our message out there -- that saving the environment is important and that conservation is cool. Plus, it gives Planet Check's listeners a chance to get acquainted with a company like Esurance. Esurance makes conservation a part of sound business principles, in their operations and in their advertising."
Kelly Quirke, Executive Director of Friends of the Urban Forest, stated, "Traditionally, like most non-profits, Friends of the Urban Forest has had to do most of the outreach to get corporate dollars. It was nice, and rather novel, to have the phone ring and hear that a company was actually seeking us out to help our efforts to enhance and protect San Francisco's urban forest. Esurance's partnership with Friends of the Urban Forest will show how businesses and non-profits can work together to create beautiful, healthy, productive communities together."
Swigart concluded, "Though Earth Day always focuses a lot of attention on the environment, this is a year-round commitment for Esurance. We will continue to look for ways to make our operations even 'greener' than they already are. When that's not possible, we will explore ways to try to offset any negative environmental effects arising from our operations. When you look at the long-term costs of environmental damage -- to our forests, to our air, to our water, to people -- decision-making that isn't environmentally aware does not make much sense. Someone will end up paying for it long-term. Companies have a very important role to play in their communities and in the broader world. As corporate citizens and as citizens of the communities where we live and work, we all have a responsibility to affect positive change."
John Swigart, Esurance Managing Director and CMO, stated, "We have always been proud of our ability to help the environment by making sound business choices. In our decision-making, we have found that the green-friendly option is almost always the most cost-effective option. Our reliance on technology means that we're a virtually paperless organization. We also chose hybrids where they were available for the vehicles used by our claims adjusters. This helps us keep our costs low, which helps us keep our insurance rates for consumers reasonable. However, this obviously has benefits for the environment. Our customers really can say they save some green with Esurance, both monetarily and environmentally."
However, Esurance realized that it wanted to do even more to lend the planet a helping hand, embarking on its strategy of environmentally focused corporate sponsorships. Swigart added, "When we looked at the environmental benefits already inherent to our operations, we knew we could do even more to create environmental benefits. To help spread the important message of environmental responsibility, we sponsored Planet Check for the month. In terms of the paper we are still required to use in our operations, we wanted to plant trees to help offset the negative environmental impact arising from that. That's why we have started to work with Friends of the Urban Forest."
Planet Check's CEO, Mo Mellady, explained, "We are honored to have forward-thinking companies like Esurance on board helping us spread the green love! Thanks to earth-friendly sponsors like Esurance, we continue to get our message out there -- that saving the environment is important and that conservation is cool. Plus, it gives Planet Check's listeners a chance to get acquainted with a company like Esurance. Esurance makes conservation a part of sound business principles, in their operations and in their advertising."
Kelly Quirke, Executive Director of Friends of the Urban Forest, stated, "Traditionally, like most non-profits, Friends of the Urban Forest has had to do most of the outreach to get corporate dollars. It was nice, and rather novel, to have the phone ring and hear that a company was actually seeking us out to help our efforts to enhance and protect San Francisco's urban forest. Esurance's partnership with Friends of the Urban Forest will show how businesses and non-profits can work together to create beautiful, healthy, productive communities together."
Swigart concluded, "Though Earth Day always focuses a lot of attention on the environment, this is a year-round commitment for Esurance. We will continue to look for ways to make our operations even 'greener' than they already are. When that's not possible, we will explore ways to try to offset any negative environmental effects arising from our operations. When you look at the long-term costs of environmental damage -- to our forests, to our air, to our water, to people -- decision-making that isn't environmentally aware does not make much sense. Someone will end up paying for it long-term. Companies have a very important role to play in their communities and in the broader world. As corporate citizens and as citizens of the communities where we live and work, we all have a responsibility to affect positive change."
The Attack on Credit Scoring and Other Risk-Based Insurance Pricing Tools
As product manager for the state's largest writer of auto insurance through independent agents, I want to take this opportunity to remind you that preserving our ability to use credit-based insurance scores and other risk-based pricing tools, such as territory classifications, is not a done deal in the current Texas legislative session. And, if we are not successful in preserving this right, I believe it will result in the greatest negative impact on independent agents and their customers.
What can we learn from TDI's credit study?
In the January 2005 Texas Department of Insurance report on the use of credit-based insurance scores, which studied over two million consumers, Commissioner Montemayor put any actuarial arguments against credit scoring to rest for good concluding that "credit scoring significantly improves pricing accuracy when combined with other rating variables in predicting risk." He also said that, "credit scoring ... is not unfairly discriminatory as defined in current law." And he concluded that all risk-based pricing tools used in insurance, including credit scoring, have a disproportionate impact to some extent and if one was going to use that as the basis to ban risk-based pricing and underwriting we would revert to a homogenized system in which everyone is charged the same price, regardless of risk. He added that that "... would be a setback to all Texans, of all races, especially those of moderate to lower income whose risk remains low."
Drive Insurance agrees with Montemayor and we believe independent agents have the most to lose if this happens.
Why is this particularly bad for local independent agents?
If banned, direct writers would still be able to use credit. Even if there is a legislative outcome banning credit in Texas, direct writers would still have access to credit information to prescreen mailing lists, which is allowed by federal law. This would put independent agents at a distinct competitive disadvantage. Today prescreening provides little to no incremental value to direct writers competing against independent agent companies that use credit scoring as part of their rating algorithm.
(Note: All insurers are allowed to use credit scoring to prescreen per federal law but the use of this tool is not economically feasible at the individual independent agent level.)
Adverse selection would disproportionately undermine agent competitiveness.
Companies selling through independent agents tend to be more broadly distributed than other insurers. This means that the cumulative book written by independent agency companies represents a much broader cross-section of the insurance shopping population and a much higher percentage of "nonstandard" drivers than the books written by captive and direct writers. The ultimate result of being more broadly distributed is that companies selling through independent agents are subject to more adverse selection when government regulations are put in place that ban the use of independently predictive risk-based pricing tools.
To remain profitable, insurers must address the adverse selection problem by: 1) limiting distribution of their product, 2) restricting underwriting to reject more applicants and/or 3) increasing their base rates higher relative to direct or captive writers. These actions will hurt the competitiveness of independent agents and restrict the number of options they have to quote their customers. This is an attack on independent agents' key competitive advantages: local, in-person professional counsel offering customers a choice of insurance carriers.
So what does it all mean?
Drive Insurance believes that creating an environment that forces insurers to knowingly price their policies inaccurately is not good public policy and is inherently unfair to safe drivers of all ethnic and income groups. The only people who win from this are the consumers who receive an unjustified rate subsidy. Restricting the use of credit-based insurance scores—or any risk-based pricing tool—is particularly bad for independent agents who serve the most broad and diverse customer segments in the market.
What can we learn from TDI's credit study?
In the January 2005 Texas Department of Insurance report on the use of credit-based insurance scores, which studied over two million consumers, Commissioner Montemayor put any actuarial arguments against credit scoring to rest for good concluding that "credit scoring significantly improves pricing accuracy when combined with other rating variables in predicting risk." He also said that, "credit scoring ... is not unfairly discriminatory as defined in current law." And he concluded that all risk-based pricing tools used in insurance, including credit scoring, have a disproportionate impact to some extent and if one was going to use that as the basis to ban risk-based pricing and underwriting we would revert to a homogenized system in which everyone is charged the same price, regardless of risk. He added that that "... would be a setback to all Texans, of all races, especially those of moderate to lower income whose risk remains low."
Drive Insurance agrees with Montemayor and we believe independent agents have the most to lose if this happens.
Why is this particularly bad for local independent agents?
If banned, direct writers would still be able to use credit. Even if there is a legislative outcome banning credit in Texas, direct writers would still have access to credit information to prescreen mailing lists, which is allowed by federal law. This would put independent agents at a distinct competitive disadvantage. Today prescreening provides little to no incremental value to direct writers competing against independent agent companies that use credit scoring as part of their rating algorithm.
(Note: All insurers are allowed to use credit scoring to prescreen per federal law but the use of this tool is not economically feasible at the individual independent agent level.)
Adverse selection would disproportionately undermine agent competitiveness.
Companies selling through independent agents tend to be more broadly distributed than other insurers. This means that the cumulative book written by independent agency companies represents a much broader cross-section of the insurance shopping population and a much higher percentage of "nonstandard" drivers than the books written by captive and direct writers. The ultimate result of being more broadly distributed is that companies selling through independent agents are subject to more adverse selection when government regulations are put in place that ban the use of independently predictive risk-based pricing tools.
To remain profitable, insurers must address the adverse selection problem by: 1) limiting distribution of their product, 2) restricting underwriting to reject more applicants and/or 3) increasing their base rates higher relative to direct or captive writers. These actions will hurt the competitiveness of independent agents and restrict the number of options they have to quote their customers. This is an attack on independent agents' key competitive advantages: local, in-person professional counsel offering customers a choice of insurance carriers.
So what does it all mean?
Drive Insurance believes that creating an environment that forces insurers to knowingly price their policies inaccurately is not good public policy and is inherently unfair to safe drivers of all ethnic and income groups. The only people who win from this are the consumers who receive an unjustified rate subsidy. Restricting the use of credit-based insurance scores—or any risk-based pricing tool—is particularly bad for independent agents who serve the most broad and diverse customer segments in the market.
State auditor developing affordable health insurance program
Help is on the horizon for many Montana residents, like Bruce and Lauri Mosbrucker of Hamilton, who have no health insurance, according to state Auditor John Morrison.
Three years ago, Morrison proposed using tobacco tax revenue to help small businesses buy health insurance for their employees; to fully fund the Children's Health Insurance Program, which would attract millions in federal matching funds; to help seniors and others afford prescription drugs; and to see that doctors and hospitals are adequately paid for treating Medicaid patients.
Last year, Healthy Kids Healthy Montana, a coalition of leading health-care and public interest groups from across Montana, put Initiative 149 on the ballot. Voters overwhelmingly passed the initiative, providing funding for those programs.
This year, Morrison's office wrote legislation to implement I-149.
"We had great success implementing I-149 in this legislative session," he says.
One bill provided tax credits and a pool of money to help small businesses offer affordable health insurance to their employees.
"Medical bills are the leading cause of personal bankruptcy in Montana and around the country," Morrison says. "There are far too many people like the Mosbruckers."
Most people who have health insurance get it through their jobs, he adds. And most of the uninsured in Montana work for employers who have fewer than 10 employees.
"That's why we're targeting I-149 resources at small businesses," says Morrison.
Sixty percent of small businesses don't provide health insurance, he says. But 80 percent of those indicated they would if the price comes down.
Under the legislation, tax credits will now give small businesses $100 per month per employee, plus $100 per spouse and $40 for each child, according to Morrison.
The legislation, he adds, "could very well make it possible to allow his employer to afford to cover Bruce Mosbrucker and his family."
The state auditor's office is trying to develop additional programs to allow the uninsured to pay as much of their share of health insurance as they can afford, Morrison adds.
Montana has a high-risk insurance program that provides insurance to people like Lauri Mosbrucker who can't get coverage in traditional insurance plans because of pre-existing conditions. The program, called Montana Comprehensive Health Insurance, covers thousands of Montanans, according to Morrison.
Unfortunately, he says, many people who would qualify for MCHI can't afford the premiums.
Another bill implementing I-149 will provide prescription drug assistance to thousands of Montanans; it was signed near the end of the legislative session by Gov. Brian Schweitzer.
Finally, Morrison says, I-149 funds have been used to expand the Children's Health Insurance Program.
In the past few years, according to Morrison, Montana has failed to come up with its matching share of federal funds for CHIP.
"So," he says, "we've left millions of federal dollars on the table, while 25,000 Montana children go without health insurance. CHIP now covers 10,000 kids. By using I-149 funds, it will cover about 3,000 more."
Three years ago, Morrison proposed using tobacco tax revenue to help small businesses buy health insurance for their employees; to fully fund the Children's Health Insurance Program, which would attract millions in federal matching funds; to help seniors and others afford prescription drugs; and to see that doctors and hospitals are adequately paid for treating Medicaid patients.
Last year, Healthy Kids Healthy Montana, a coalition of leading health-care and public interest groups from across Montana, put Initiative 149 on the ballot. Voters overwhelmingly passed the initiative, providing funding for those programs.
This year, Morrison's office wrote legislation to implement I-149.
"We had great success implementing I-149 in this legislative session," he says.
One bill provided tax credits and a pool of money to help small businesses offer affordable health insurance to their employees.
"Medical bills are the leading cause of personal bankruptcy in Montana and around the country," Morrison says. "There are far too many people like the Mosbruckers."
Most people who have health insurance get it through their jobs, he adds. And most of the uninsured in Montana work for employers who have fewer than 10 employees.
"That's why we're targeting I-149 resources at small businesses," says Morrison.
Sixty percent of small businesses don't provide health insurance, he says. But 80 percent of those indicated they would if the price comes down.
Under the legislation, tax credits will now give small businesses $100 per month per employee, plus $100 per spouse and $40 for each child, according to Morrison.
The legislation, he adds, "could very well make it possible to allow his employer to afford to cover Bruce Mosbrucker and his family."
The state auditor's office is trying to develop additional programs to allow the uninsured to pay as much of their share of health insurance as they can afford, Morrison adds.
Montana has a high-risk insurance program that provides insurance to people like Lauri Mosbrucker who can't get coverage in traditional insurance plans because of pre-existing conditions. The program, called Montana Comprehensive Health Insurance, covers thousands of Montanans, according to Morrison.
Unfortunately, he says, many people who would qualify for MCHI can't afford the premiums.
Another bill implementing I-149 will provide prescription drug assistance to thousands of Montanans; it was signed near the end of the legislative session by Gov. Brian Schweitzer.
Finally, Morrison says, I-149 funds have been used to expand the Children's Health Insurance Program.
In the past few years, according to Morrison, Montana has failed to come up with its matching share of federal funds for CHIP.
"So," he says, "we've left millions of federal dollars on the table, while 25,000 Montana children go without health insurance. CHIP now covers 10,000 kids. By using I-149 funds, it will cover about 3,000 more."
Fight looms over health insurance costs for hotel employees
By Andrew F. Hamm
SILICON VALLEY/SAN JOSE BUSINESS JOURNAL
Updated: 8:00 p.m. ET April 24, 2005
South Bay hotel managers are hoping to keep stalled union contract talks from blowing up into a full-blown labor war like the one San Francisco hotels are experiencing.
More than 200 workers from United Here Local 19 marched on the Wyndham Hotel and Hyatt San Jose April 15, banging pots and shouting pro-union slogans to protest the lack of progress in labor talks. The noise tactics have been a hallmark of the San Francisco battles.
While the union is seeking a 4 percent wage increase, the big issue is rising health care costs, both sides agree. The union is trying to keep its members health care program fully funded by the hotels while hotel management is trying to cap its costs.
"They are trying to set up a co-pay system," says union spokesman Enrique Fernandez. "But most of our workers are making $9.50 to $10 an hour, which means they won't be able to afford medical at all if they have to pay."
More than a third of the 3,000 room attendants, valets, bartenders, waitpersons and others that make up Local 19 have been without contracts at the Hilton San Jose and Wyndham in San Jose and the Four Points by Sheraton in Sunnyvale since Dec. 31. The Hyatt San Jose contract expires May 31 and the San Jose Fairmont contract expires Dec. 31. The Crowne Plaza signed a one-year contract with its workers in December.
Under the current system, each hotel pays a lump sum into a trust fund that pays for healthcare for all hotel union workers. Workers are required to pay extra for family members, about $70 a month for a family. Union and hotel representatives jointly manage the trust fund.
The San Jose Convention & Visitors Bureau has so far stayed out of the negotiations but has been following the talks, says its president and CEO, Daniel Fenton.
"If for some reason there isn't any progress, there will be some more organized effort to resolve this," he says.
Both sides are downplaying strike talk although Mr. Fernandez says the union is willing to take that step if necessary.
"We are moving in the right direction but there is concern," he says. "Right now, we are trying to bring awareness to the situation."
A number of scenarios are being discussed, including going to a co-pay system and requiring higher contributions for family members. The union is holding out for the status quo, Mr. Fernandez says.
Unlike San Francisco, where the 14 union hotels negotiate with the union as a single entity, each South Bay hotel negotiates its own contract.
However, what one hotel agrees to is closely watched by the others, says Dick Leasia, head of San Jose-based Thelen Reid & Priest law firm's Labor Employment Practice.
"Health care costs are starting to go through the roof," says Mr. Leasia, with many industries seeing increases in the 12 percent to 15 percent range. "General Motors is being brought to its knees in large part because of healthcare costs."
The nine-month San Francisco hotel labor battle has raged on despite a healthy rebound in occupancy and room rates led by an increase in tourism. San Francisco's hotels are averaging 67 percent occupancy and average daily room rates of $147, according to PKF Consulting, an industry consultant firm. Both numbers are more than 5 percent above 2004 numbers.
Meanwhile, San Jose's 14 major hotels are averaging about 51 percent occupancy and $116 average daily room rate, about the same as 2004 numbers.
"We are making progress ... I'd be more concerned if we weren't progressing," says John Southwell, general manager of Hilton San Jose, who is leading his hotel's labor negotiations. "These are tough times and it's an expensive place to live and we've been down for a few years... which makes this tough."
Both sides acknowledge that healthcare costs are rising, Mr. Southwell says. "There is a certain reality we have to face about costs," he says. "The real answer is to fix the healthcare system."
SILICON VALLEY/SAN JOSE BUSINESS JOURNAL
Updated: 8:00 p.m. ET April 24, 2005
South Bay hotel managers are hoping to keep stalled union contract talks from blowing up into a full-blown labor war like the one San Francisco hotels are experiencing.
More than 200 workers from United Here Local 19 marched on the Wyndham Hotel and Hyatt San Jose April 15, banging pots and shouting pro-union slogans to protest the lack of progress in labor talks. The noise tactics have been a hallmark of the San Francisco battles.
While the union is seeking a 4 percent wage increase, the big issue is rising health care costs, both sides agree. The union is trying to keep its members health care program fully funded by the hotels while hotel management is trying to cap its costs.
"They are trying to set up a co-pay system," says union spokesman Enrique Fernandez. "But most of our workers are making $9.50 to $10 an hour, which means they won't be able to afford medical at all if they have to pay."
More than a third of the 3,000 room attendants, valets, bartenders, waitpersons and others that make up Local 19 have been without contracts at the Hilton San Jose and Wyndham in San Jose and the Four Points by Sheraton in Sunnyvale since Dec. 31. The Hyatt San Jose contract expires May 31 and the San Jose Fairmont contract expires Dec. 31. The Crowne Plaza signed a one-year contract with its workers in December.
Under the current system, each hotel pays a lump sum into a trust fund that pays for healthcare for all hotel union workers. Workers are required to pay extra for family members, about $70 a month for a family. Union and hotel representatives jointly manage the trust fund.
The San Jose Convention & Visitors Bureau has so far stayed out of the negotiations but has been following the talks, says its president and CEO, Daniel Fenton.
"If for some reason there isn't any progress, there will be some more organized effort to resolve this," he says.
Both sides are downplaying strike talk although Mr. Fernandez says the union is willing to take that step if necessary.
"We are moving in the right direction but there is concern," he says. "Right now, we are trying to bring awareness to the situation."
A number of scenarios are being discussed, including going to a co-pay system and requiring higher contributions for family members. The union is holding out for the status quo, Mr. Fernandez says.
Unlike San Francisco, where the 14 union hotels negotiate with the union as a single entity, each South Bay hotel negotiates its own contract.
However, what one hotel agrees to is closely watched by the others, says Dick Leasia, head of San Jose-based Thelen Reid & Priest law firm's Labor Employment Practice.
"Health care costs are starting to go through the roof," says Mr. Leasia, with many industries seeing increases in the 12 percent to 15 percent range. "General Motors is being brought to its knees in large part because of healthcare costs."
The nine-month San Francisco hotel labor battle has raged on despite a healthy rebound in occupancy and room rates led by an increase in tourism. San Francisco's hotels are averaging 67 percent occupancy and average daily room rates of $147, according to PKF Consulting, an industry consultant firm. Both numbers are more than 5 percent above 2004 numbers.
Meanwhile, San Jose's 14 major hotels are averaging about 51 percent occupancy and $116 average daily room rate, about the same as 2004 numbers.
"We are making progress ... I'd be more concerned if we weren't progressing," says John Southwell, general manager of Hilton San Jose, who is leading his hotel's labor negotiations. "These are tough times and it's an expensive place to live and we've been down for a few years... which makes this tough."
Both sides acknowledge that healthcare costs are rising, Mr. Southwell says. "There is a certain reality we have to face about costs," he says. "The real answer is to fix the healthcare system."
Friday, April 22, 2005
Reilly throws up roadblock on auto-insurance plan
By Jay Fitzgerald
Friday, April 22, 2005
A proposal to impose $15 million in surcharges on auto insurers hit a political pothole yesterday, with Attorney General Tom Reilly saying he opposes it.
Lawmakers are working on legislation that would charge auto insurers 0.25 percent on premiums, with the money helping to pay for police training across the state.
Supporters say the funds are desperately needed in the wake of local budget cuts. But critics have said insurers would merely pass the surcharges - estimated at about $4 a year per premium - along to motorists.
Reilly, a proponent of auto-insurance reform and a possible Democratic guberatorial candidate next year, said he supports raising money for cops, ``but not through a surcharge on state drivers.
``I believe this is the wrong way to support police training,'' he said, arguing that lawmakers must fund police training within the current budget.
Reilly added that efforts under way to reform the state's auto-insurance industry aim to lower premiums, not raise them.
The insurance industry and Gov. Mitt Romney have already expressed opposition to the plan.
Reilly's opposition further isolates Democratic lawmakers trying to find funding for police-training programs.
One Democrat has challenged critics to specifically identify ways to pay for expanded police training.
Friday, April 22, 2005
A proposal to impose $15 million in surcharges on auto insurers hit a political pothole yesterday, with Attorney General Tom Reilly saying he opposes it.
Lawmakers are working on legislation that would charge auto insurers 0.25 percent on premiums, with the money helping to pay for police training across the state.
Supporters say the funds are desperately needed in the wake of local budget cuts. But critics have said insurers would merely pass the surcharges - estimated at about $4 a year per premium - along to motorists.
Reilly, a proponent of auto-insurance reform and a possible Democratic guberatorial candidate next year, said he supports raising money for cops, ``but not through a surcharge on state drivers.
``I believe this is the wrong way to support police training,'' he said, arguing that lawmakers must fund police training within the current budget.
Reilly added that efforts under way to reform the state's auto-insurance industry aim to lower premiums, not raise them.
The insurance industry and Gov. Mitt Romney have already expressed opposition to the plan.
Reilly's opposition further isolates Democratic lawmakers trying to find funding for police-training programs.
One Democrat has challenged critics to specifically identify ways to pay for expanded police training.
Rivera Named Colo. Insurance Commissioner
NU Online News Service, April 21, 7:59 p.m. EDT—Colorado Republican Gov. Bill Owens has named his senior policy adviser David Rivera to be the state's insurance commissioner.
Mr. Rivera, 34, has served in the governor's administration for the past four years, advising on auto insurance, education issues and health care.
The announcement Tuesday from the governor's office said his prior background also includes serving as manager of advocacy for the American Heart Association and as coordinator of public policy issues for the American Academy of Actuaries.
The appointment is subject to Senate confirmation.
Mr. Rivera replaces Doug Dean, the former Assembly speaker, who was recently appointed director of the Colorado Public Utilities Commission.
Mr. Owens said that Mr. Rivera “shaped and helped fight for important and needed insurance reforms.”
“David has been a national leader in the concept of consumer-directed health insurance which gives patients a stronger voice in their care and, as a result, reduces health insurance costs, particularly in Medicaid,” he said.
Mr. Rivera, 34, has served in the governor's administration for the past four years, advising on auto insurance, education issues and health care.
The announcement Tuesday from the governor's office said his prior background also includes serving as manager of advocacy for the American Heart Association and as coordinator of public policy issues for the American Academy of Actuaries.
The appointment is subject to Senate confirmation.
Mr. Rivera replaces Doug Dean, the former Assembly speaker, who was recently appointed director of the Colorado Public Utilities Commission.
Mr. Owens said that Mr. Rivera “shaped and helped fight for important and needed insurance reforms.”
“David has been a national leader in the concept of consumer-directed health insurance which gives patients a stronger voice in their care and, as a result, reduces health insurance costs, particularly in Medicaid,” he said.
higher health insurance premiums for overweight people?
$794,820,000. That's quite a number, the best part of a billion dollars. It's also my rough estimate of how much obese and overweight people are costing the state of Maine and employers here.
The California Department of Health Services recently released a study placing the price tag for corpulence at $21.7 billion for that state's 35.5 million residents. That works out to about $611.40 a head.
Direct and indirect medical costs accounted for 47 percent of that while lost job productivity was responsible for more than 51 percent. The study calculated the cost for the year 2000; costs for 2005 are expected to reach $28 billion.
Taking the per capita cost for the year 2000 and multiplying it by the population of the state of Maine renders a conservative estimate of the effect on the economy as a whole. Most likely the costs would be greater as the number is based on 5-year-old figures and Maine has a higher percentage of obese and overweight people. A 2002 study by the Centers for Disease Control and Prevention indicated 55.9 percent of Maine's population was considered to be overweight or obese as opposed to 54.6 percent of California's.
Insurance companies and employers have long recognized the need to control these costs and have instituted any number of "wellness plans." These plans attempt to get people out of their recliners by offering rewards for self-reported exercise time. Some even consider taking a stroll behind a self-propelled mower or planting a few petunias in the garden as eligible activities.
Unfortunately, the people who are most likely to collect the rewards from these programs are the ones who were doing these things anyway. A gym bag with matching water bottle is little incentive for Mr. Big to trade in his lawn tractor with the cup holder for a push mower.
Perhaps a more effective plan would be to put the onus on those who are part of the problem. Structuring health insurance plans like auto insurance plans would go a long way toward placing the costs for unhealthy behavior on those who are most responsible for those costs.
Sounds a bit Draconian? Perhaps it is, but it's also obvious the current plan isn't very effective and something needs to be done.
By increasing insurance premiums for individuals who persist in unhealthy behaviors (e.g.; overweight, smoking, substance abuse, etc.) just as auto insurance is increased for speeding, drunken driving, etc., an incentive is created to modify behavior and a tangible reward (reduced premiums) is provided those who maintain healthy lifestyles.
Health care and insurance reform have become standard planks in every candidate's platform. Nevertheless, like the weather, it's something that is a major topic of conversation but the recipient of little effective action. Complaining about the increasing cost of health insurance and investigating the practices of insurance companies, health care facilities, doctors and drug companies while ignoring the consumers is a lot like complaining about the heat, humidity and the dangers of skin cancer while ignoring the fact that you were the one who chose to move to Florida.
It's difficult to talk about a subject that may directly affect yourself, your spouse, a family member or a close friend. However, ignoring the situation will not make it go away. Attempting to be philosophically correct will just result in talking around the problem without actually coming to grips with it.
Government regulation can only go so far in controlling costs; at some point individual choice and personal responsibility have to take over. As our mothers told us, "You can't have your cake and eat it too." In this case, we can't have affordable health insurance while eating all the cake we can get our hands on.
We can continue talking about solutions or we can take action. Action, like exercise, will at first be difficult, perhaps painful and something we will try to invent reasons to avoid. However, the rewards will be a healthier population, reduced cost to the state and employers, the possibility of increased wages and reduced taxes due to the reduction in medical expenses, a state that is more attractive to employers, and, of course, the money: $795 million. It would be like winning the lottery.
Dream a little . . .
- Special to the Press Herald
The California Department of Health Services recently released a study placing the price tag for corpulence at $21.7 billion for that state's 35.5 million residents. That works out to about $611.40 a head.
Direct and indirect medical costs accounted for 47 percent of that while lost job productivity was responsible for more than 51 percent. The study calculated the cost for the year 2000; costs for 2005 are expected to reach $28 billion.
Taking the per capita cost for the year 2000 and multiplying it by the population of the state of Maine renders a conservative estimate of the effect on the economy as a whole. Most likely the costs would be greater as the number is based on 5-year-old figures and Maine has a higher percentage of obese and overweight people. A 2002 study by the Centers for Disease Control and Prevention indicated 55.9 percent of Maine's population was considered to be overweight or obese as opposed to 54.6 percent of California's.
Insurance companies and employers have long recognized the need to control these costs and have instituted any number of "wellness plans." These plans attempt to get people out of their recliners by offering rewards for self-reported exercise time. Some even consider taking a stroll behind a self-propelled mower or planting a few petunias in the garden as eligible activities.
Unfortunately, the people who are most likely to collect the rewards from these programs are the ones who were doing these things anyway. A gym bag with matching water bottle is little incentive for Mr. Big to trade in his lawn tractor with the cup holder for a push mower.
Perhaps a more effective plan would be to put the onus on those who are part of the problem. Structuring health insurance plans like auto insurance plans would go a long way toward placing the costs for unhealthy behavior on those who are most responsible for those costs.
Sounds a bit Draconian? Perhaps it is, but it's also obvious the current plan isn't very effective and something needs to be done.
By increasing insurance premiums for individuals who persist in unhealthy behaviors (e.g.; overweight, smoking, substance abuse, etc.) just as auto insurance is increased for speeding, drunken driving, etc., an incentive is created to modify behavior and a tangible reward (reduced premiums) is provided those who maintain healthy lifestyles.
Health care and insurance reform have become standard planks in every candidate's platform. Nevertheless, like the weather, it's something that is a major topic of conversation but the recipient of little effective action. Complaining about the increasing cost of health insurance and investigating the practices of insurance companies, health care facilities, doctors and drug companies while ignoring the consumers is a lot like complaining about the heat, humidity and the dangers of skin cancer while ignoring the fact that you were the one who chose to move to Florida.
It's difficult to talk about a subject that may directly affect yourself, your spouse, a family member or a close friend. However, ignoring the situation will not make it go away. Attempting to be philosophically correct will just result in talking around the problem without actually coming to grips with it.
Government regulation can only go so far in controlling costs; at some point individual choice and personal responsibility have to take over. As our mothers told us, "You can't have your cake and eat it too." In this case, we can't have affordable health insurance while eating all the cake we can get our hands on.
We can continue talking about solutions or we can take action. Action, like exercise, will at first be difficult, perhaps painful and something we will try to invent reasons to avoid. However, the rewards will be a healthier population, reduced cost to the state and employers, the possibility of increased wages and reduced taxes due to the reduction in medical expenses, a state that is more attractive to employers, and, of course, the money: $795 million. It would be like winning the lottery.
Dream a little . . .
- Special to the Press Herald
Thursday, April 21, 2005
Auto Insurance IPO
NEW YORK (MarketWatch) -- National Atlantic Holdings fell below its offering price in its stock market debut Thursday, as investors hit the brakes on the auto insurance firm.
The IPO market has been rocky of late, with companies going public facing bearish sentiment and losses in the major indexes due to inflation woes and energy price hikes.
National Atlantic Holdings Corp. (NAHC) opened at $12, flat with its IPO price. The stock fell 3% to $11.70 in recent action on the Nasdaq.
Signs of a weak debut came as the company priced its deal of 6.65 million shares below the estimated $14 to $16 price range.
The Freehold, N.J.-based firm raised $80 million in the offering, with underwriter Citigroup (C).
Ohio Casualty Insurance Company (OCAS) sold 665,000 shares in the IPO.
Accuride on deck for Friday
Accuride (ACW) is on deck to debut its initial public offering on Friday, but at a price as low as $10 a share, IPO trader Sal Morreale told MarketWatch.
Accuride had expected on Tuesday night to price 13.9 million shares at $17 to $19 each, in a bid to raise about $250 million through underwriters Citigroup, Deutsche Bank and UBS.
Morreale said despite gains in demand for trucking parts, Accuride is being dragged down by weakness in shares of General Motors (GM), Ford (F) and Delphi (DPH).
"The company is a victim of a bad industry group," he added.
The Dow's rally on Thursday will help the IPO's prospects, according to Morreale.
The company was forced to postpone its IPO in January because of concerns raised by its independent auditors that have since been resolved, Renaissance Capital said in its IPO of the week column. See full story.
Accuride was founded in 1986 to take over the assets of Firestone Steel Products. In 1988, it became a subsidiary of Phelps Dodge and was subsequently taken over by private-equity firm Kohlberg Kravis Roberts in 1997.
Teekay sets IPO price range
Teekay LNG Partners L.P. on Thursday set an estimated price range of $20-$22 in its upcoming initial public offering of 5.5 million common units. Based on the midpoint of the price range, the shipping firm will raise $116 million.
The company is a Marshall Islands limited partnership recently formed by Teekay Shipping Corp. (TK) as part of its strategy to expand its operations in the liquefied natural gas marine transportation sector. Teekay LNG plans to trade on the New York Stock Exchange under the ticker symbol "TGP."
China TechFaith sets IPO price range
China TechFaith Wireless on Thursday said it plans to offer 8.73 million American depositary receipts at $15-$17 each in a bid to raise about $140 million with underwriter Merrill Lynch (MER).
The designer of mobile handsets plans to trade on the Nasdaq under the ticker symbol "CNTF."
Medex Holdings Corp. withdraws $345M IPO
Medex Holdings Corp. on Thursday formally withdrew its $345 million initial public offering, six months after the company agreed to be bought by Smiths Group for $925 million.
In a letter to regulators, the company said, "it is not now in its best interests or that of its shareholders to undertake this offering."
Medex was 83% owned by One Equity Partners, an affiliate of JP Morgan Chase & Co (JPM).
Management and employees own the remaining amount. The company filed to go public last August.
The IPO market has been rocky of late, with companies going public facing bearish sentiment and losses in the major indexes due to inflation woes and energy price hikes.
National Atlantic Holdings Corp. (NAHC) opened at $12, flat with its IPO price. The stock fell 3% to $11.70 in recent action on the Nasdaq.
Signs of a weak debut came as the company priced its deal of 6.65 million shares below the estimated $14 to $16 price range.
The Freehold, N.J.-based firm raised $80 million in the offering, with underwriter Citigroup (C).
Ohio Casualty Insurance Company (OCAS) sold 665,000 shares in the IPO.
Accuride on deck for Friday
Accuride (ACW) is on deck to debut its initial public offering on Friday, but at a price as low as $10 a share, IPO trader Sal Morreale told MarketWatch.
Accuride had expected on Tuesday night to price 13.9 million shares at $17 to $19 each, in a bid to raise about $250 million through underwriters Citigroup, Deutsche Bank and UBS.
Morreale said despite gains in demand for trucking parts, Accuride is being dragged down by weakness in shares of General Motors (GM), Ford (F) and Delphi (DPH).
"The company is a victim of a bad industry group," he added.
The Dow's rally on Thursday will help the IPO's prospects, according to Morreale.
The company was forced to postpone its IPO in January because of concerns raised by its independent auditors that have since been resolved, Renaissance Capital said in its IPO of the week column. See full story.
Accuride was founded in 1986 to take over the assets of Firestone Steel Products. In 1988, it became a subsidiary of Phelps Dodge and was subsequently taken over by private-equity firm Kohlberg Kravis Roberts in 1997.
Teekay sets IPO price range
Teekay LNG Partners L.P. on Thursday set an estimated price range of $20-$22 in its upcoming initial public offering of 5.5 million common units. Based on the midpoint of the price range, the shipping firm will raise $116 million.
The company is a Marshall Islands limited partnership recently formed by Teekay Shipping Corp. (TK) as part of its strategy to expand its operations in the liquefied natural gas marine transportation sector. Teekay LNG plans to trade on the New York Stock Exchange under the ticker symbol "TGP."
China TechFaith sets IPO price range
China TechFaith Wireless on Thursday said it plans to offer 8.73 million American depositary receipts at $15-$17 each in a bid to raise about $140 million with underwriter Merrill Lynch (MER).
The designer of mobile handsets plans to trade on the Nasdaq under the ticker symbol "CNTF."
Medex Holdings Corp. withdraws $345M IPO
Medex Holdings Corp. on Thursday formally withdrew its $345 million initial public offering, six months after the company agreed to be bought by Smiths Group for $925 million.
In a letter to regulators, the company said, "it is not now in its best interests or that of its shareholders to undertake this offering."
Medex was 83% owned by One Equity Partners, an affiliate of JP Morgan Chase & Co (JPM).
Management and employees own the remaining amount. The company filed to go public last August.
Six lesbian state employees backed by the American Civil Liberties...
MADISON, Wis. - Six lesbian state employees backed by the American Civil Liberties Union went to court, saying Wisconsin's refusal to provide health insurance for their partners violates the state constitution.
If successful, their lawsuit would force all state government agencies to offer gay state employees the same health insurance and family leave benefits to their partners that are currently provided to married workers.
The lawsuit filed Wednesday claims a state law excluding gay partners of state employees from health benefits violates the Wisconsin Constitution's equal-rights protection clause, which guarantees equal treatment for people in similar situations.
"It is unfair that these people who work as hard as their neighbor in the next cubicle, the teacher in the next classroom, are not able to share in the kind of benefits that their co-workers share in," said Larry Dupuis, legal director of ACLU of Wisconsin.
The lawsuit comes one month after Republican lawmakers expressed their opposition to a call from the governor to provide domestic partner benefits to employees of the University of Wisconsin System.
Assembly Speaker John Gard, R-Peshtigo, accused the ACLU of trying to legislate its agenda through the court system.
"This is not an issue that should be decided by one liberal judge in Madison," Gard said Wednesday in a statement. "This is an issue that the taxpayers of the state of Wisconsin should get to decide through their elected representatives."
If successful, their lawsuit would force all state government agencies to offer gay state employees the same health insurance and family leave benefits to their partners that are currently provided to married workers.
The lawsuit filed Wednesday claims a state law excluding gay partners of state employees from health benefits violates the Wisconsin Constitution's equal-rights protection clause, which guarantees equal treatment for people in similar situations.
"It is unfair that these people who work as hard as their neighbor in the next cubicle, the teacher in the next classroom, are not able to share in the kind of benefits that their co-workers share in," said Larry Dupuis, legal director of ACLU of Wisconsin.
The lawsuit comes one month after Republican lawmakers expressed their opposition to a call from the governor to provide domestic partner benefits to employees of the University of Wisconsin System.
Assembly Speaker John Gard, R-Peshtigo, accused the ACLU of trying to legislate its agenda through the court system.
"This is not an issue that should be decided by one liberal judge in Madison," Gard said Wednesday in a statement. "This is an issue that the taxpayers of the state of Wisconsin should get to decide through their elected representatives."
California auto insurance rates dropping for first time in years
For the first time in years, California auto insurance rates have dropped for many drivers. We have a look tonight at what's behind this welcome change.
“I don't like it, but I have to pay it.”
And that's probably how most of us feel about auto insurance. But there is good news. The California Department of Insurance reports it has seen the beginning of a possible trend of overall decline in rates for the first time since 1999.
It's not news everyone expects to hear.
“It's something good to hear, rather than hearing about everything going up,” said driver Jill Carmona. “It is surprising.”
Geico rates are down over six percent, AAA is down five percent. State Farm, California's largest auto insurer, lowered its rates by over seven-and-a-half percent last November and another decrease will come next month.
State Farm claims the two cuts will save their customers 325 million dollars. Agent Cindy Pieper says safety results in savings.
“The driving force is maturing,” said State Farm Agent Cindy Pieper. “Typically, they're safer drivers. Cars are becoming safer, better airbags, better steering, better braking, that sort of thing.”
Some experts say it’s higher gas prices that have helped out with rates. It's reduced the number of cars on the road. Therefore, fewer accidents and fewer claims.
And car insurance customers are changing, too.
“To cut the costs the past couple years, people have been raising their deductibles and have not been so quick to file claims. That has helped everyone's rates.”
Pieper adds the type of driver you are and how much you drive your car are just a couple of factors in how much you can save. And of course, it helps if you at least try to save.
“I don't shop,” said driver Dean Savoie. “I know I could get cheaper insurance . . . I’m lazy, I don’t know. I pay it.”
In the end, we all do.
“I don't like it, but I have to pay it.”
And that's probably how most of us feel about auto insurance. But there is good news. The California Department of Insurance reports it has seen the beginning of a possible trend of overall decline in rates for the first time since 1999.
It's not news everyone expects to hear.
“It's something good to hear, rather than hearing about everything going up,” said driver Jill Carmona. “It is surprising.”
Geico rates are down over six percent, AAA is down five percent. State Farm, California's largest auto insurer, lowered its rates by over seven-and-a-half percent last November and another decrease will come next month.
State Farm claims the two cuts will save their customers 325 million dollars. Agent Cindy Pieper says safety results in savings.
“The driving force is maturing,” said State Farm Agent Cindy Pieper. “Typically, they're safer drivers. Cars are becoming safer, better airbags, better steering, better braking, that sort of thing.”
Some experts say it’s higher gas prices that have helped out with rates. It's reduced the number of cars on the road. Therefore, fewer accidents and fewer claims.
And car insurance customers are changing, too.
“To cut the costs the past couple years, people have been raising their deductibles and have not been so quick to file claims. That has helped everyone's rates.”
Pieper adds the type of driver you are and how much you drive your car are just a couple of factors in how much you can save. And of course, it helps if you at least try to save.
“I don't shop,” said driver Dean Savoie. “I know I could get cheaper insurance . . . I’m lazy, I don’t know. I pay it.”
In the end, we all do.
small-business insurance woe
By BART JANSEN
Washington Correspondent
Copyright © 2005 Blethen Maine Newspapers Inc.
WASHINGTON -- Greg Newman of Hallowell told a Senate committee Wednesday about the importance -- and difficulty -- of covering the rising cost of health insurance for his 50 workers at Newman Concrete Services.
"I can't afford to ask my employees to pay more and I can't afford to pay more," he told the Senate Small Business Committee. "In the near future, it's going to become simply impossible."
Sen. Olympia Snowe, R-Maine, the committee chairman, invited his testimony as part of a hearing about association health plans. Her goal is to allow small businesses to band together across state lines to negotiate lower prices for health insurance.
"If we want to get serious about helping the uninsured, which I think is long overdue, we should start by focusing on small business," Snowe said. "This is not a radical new policy we're talking about here."
Concerns about the proposal have prevented Congress from approving legislation that the House has approved seven times. Concerns focus on who will prevent disreputable insurers from cheating their customers and who will prevent insurers from serving only the healthiest workers.
"I have to say it, but I think this is a lot of wishful thinking," said Sen. John Kerry, D-Mass. The problem that prompted the legislation is the country's 45 million uninsured people, nearly two-thirds of whom work for small businesses or depend on someone who does.
Health-care premiums rose 59 percent since 2000, while wages rose only 12.4 percent during the same period, officials said. Small businesses often find it too costly to get health insurance for their workers because they can't negotiate savings the way larger corporations and unions can.
Newman said that when he started offering workers health insurance in 2000, it cost about $21 a week for each worker who took the insurance. It now costs $100 per week.
"For a small business like mine, that is a pretty hefty bill to pay, and I am not sure how much longer I can last without getting some sort of relief from these prices," he said.
Snowe's legislation would create federal regulation for small-business health plans that wouldn't be subject to state regulation.
To be eligible, business groups would have to have been established for three years for reasons other than providing health insurance.
The groups would have to offer all participants insurance, rather than just the healthiest. State regulators and governors warn that leaving the policing to an overworked federal bureaucracy would invite trouble.
"Association plans in several states have gone bankrupt because they did not have the same regulatory oversight as state-regulated plans, leaving millions of dollars in provider bills unpaid and consumers liable for their payment," said John Morrison, Montana's state auditor.
"Rehashing strategies that have failed, such as association health plans, is not a step forward. It's time to move on to find effective solutions." Kerry suggested that the groups would seek to "cherry pick" the healthiest patients, and he questioned whether federal regulation would be looser than state standards.
Labor Secretary Elaine Chao cited a Congressional Budget Office estimate that small employers could save an average of 13 percent on their health insurance if they could join group plans, and that 2 million more people would get insurance. She also told the committee that her federal department could oversee the regulation with 150 workers.
"I'm confident we can protect the members in association health plans," Chao said.
Washington Correspondent
Copyright © 2005 Blethen Maine Newspapers Inc.
WASHINGTON -- Greg Newman of Hallowell told a Senate committee Wednesday about the importance -- and difficulty -- of covering the rising cost of health insurance for his 50 workers at Newman Concrete Services.
"I can't afford to ask my employees to pay more and I can't afford to pay more," he told the Senate Small Business Committee. "In the near future, it's going to become simply impossible."
Sen. Olympia Snowe, R-Maine, the committee chairman, invited his testimony as part of a hearing about association health plans. Her goal is to allow small businesses to band together across state lines to negotiate lower prices for health insurance.
"If we want to get serious about helping the uninsured, which I think is long overdue, we should start by focusing on small business," Snowe said. "This is not a radical new policy we're talking about here."
Concerns about the proposal have prevented Congress from approving legislation that the House has approved seven times. Concerns focus on who will prevent disreputable insurers from cheating their customers and who will prevent insurers from serving only the healthiest workers.
"I have to say it, but I think this is a lot of wishful thinking," said Sen. John Kerry, D-Mass. The problem that prompted the legislation is the country's 45 million uninsured people, nearly two-thirds of whom work for small businesses or depend on someone who does.
Health-care premiums rose 59 percent since 2000, while wages rose only 12.4 percent during the same period, officials said. Small businesses often find it too costly to get health insurance for their workers because they can't negotiate savings the way larger corporations and unions can.
Newman said that when he started offering workers health insurance in 2000, it cost about $21 a week for each worker who took the insurance. It now costs $100 per week.
"For a small business like mine, that is a pretty hefty bill to pay, and I am not sure how much longer I can last without getting some sort of relief from these prices," he said.
Snowe's legislation would create federal regulation for small-business health plans that wouldn't be subject to state regulation.
To be eligible, business groups would have to have been established for three years for reasons other than providing health insurance.
The groups would have to offer all participants insurance, rather than just the healthiest. State regulators and governors warn that leaving the policing to an overworked federal bureaucracy would invite trouble.
"Association plans in several states have gone bankrupt because they did not have the same regulatory oversight as state-regulated plans, leaving millions of dollars in provider bills unpaid and consumers liable for their payment," said John Morrison, Montana's state auditor.
"Rehashing strategies that have failed, such as association health plans, is not a step forward. It's time to move on to find effective solutions." Kerry suggested that the groups would seek to "cherry pick" the healthiest patients, and he questioned whether federal regulation would be looser than state standards.
Labor Secretary Elaine Chao cited a Congressional Budget Office estimate that small employers could save an average of 13 percent on their health insurance if they could join group plans, and that 2 million more people would get insurance. She also told the committee that her federal department could oversee the regulation with 150 workers.
"I'm confident we can protect the members in association health plans," Chao said.
Wednesday, April 20, 2005
ACE launches novel auto insurance product
ACE Europe is to offer a brand new auto product designed to provide additional cover above standard third party commercial motor policies. The new product will cater for up to GBP5 million of additional protection.
19 Apr 2005, 17:03 GMT - The new Commercial Motor Third Party Property Damage Excess policy, which ACE believes to be unique in the UK insurance market, provides stand-alone top-up cover for damage to third party property, over and above the usual commercial motor policy limits.
The international insurer said the new product is targeted at haulage & logistics operators and contractors as well as operators of other commercial motor fleets.
"Traditionally commercial motor policies limit the claims payment for damage to third party property to GBP5 million and sometimes even as little as GBP1 million" said John Line, excess casualty manager at ACE. "Well publicized accidents such as Selby in 2001, not to mention a spate of fires in road tunnels on the continent, brought home to us the inadequate levels of cover provided by most commercial motor policies."
19 Apr 2005, 17:03 GMT - The new Commercial Motor Third Party Property Damage Excess policy, which ACE believes to be unique in the UK insurance market, provides stand-alone top-up cover for damage to third party property, over and above the usual commercial motor policy limits.
The international insurer said the new product is targeted at haulage & logistics operators and contractors as well as operators of other commercial motor fleets.
"Traditionally commercial motor policies limit the claims payment for damage to third party property to GBP5 million and sometimes even as little as GBP1 million" said John Line, excess casualty manager at ACE. "Well publicized accidents such as Selby in 2001, not to mention a spate of fires in road tunnels on the continent, brought home to us the inadequate levels of cover provided by most commercial motor policies."
Costco to soon sell health insurance
By Sarah Skidmore
UNION-TRIBUNE STAFF WRITER
April 20, 2005
Costco, the popular wholesaler of all things huge, plans to add individual health insurance to its array of products and services in California in the next six months.
The Issaquah, Wash., company has sold health insurance to some of its small-business members in the West for several years and plans to add individual plans for its general membership.
"We realize we don't have to be everything to everybody," said Patrick Callins, Costco's vice president of member services. "We are looking at programs where we can help people save some money."
Because many people are struggling with the high cost of health care, several retailers are carving their own low-cost niche in the market.
Callins said the company is able to provide lower-cost health insurance – 5 percent to 20 percent less expensive than what members could buy on their own – by creating an efficient market to sell them.
The company said it creates the savings by selling a plan with large deductibles and co-payments and at the same time eliminating the commission that agents might otherwise get for the sale of the plan.
PacifiCare Health Systems designed and manages the two PPO plans Costco currently offers.
Costco is still developing the individual plan and declined to discuss its details.
Callins said the company's services, from merchant credit card processing to health insurance, are designed for what Costco said is its core membership – the small-business owner.
Martyn Hopper, the California state director of The National Federation of Independent Business, said, "It (health insurance) is the No. 1 concern of small-business owners."
According to a study by the Kaiser Family Foundation, more than half of small firms shopped for a new plan in 2004, compared with 37 percent of large companies.
Jill Peterson said she looks to Costco for nearly everything for the small business her husband and his partner run. The company, Mikelson Yachts in San Diego, was self-insured, which was getting expensive.
So when Peterson, who handles the administrative issues for the company, was evaluating other options, she said it seemed natural to look to Costco.
Peterson said she couldn't recall the exact cost, but said it was less than they spent before, and an insurance agent told her he couldn't make her a better deal.
Other retailers are targeting the small-business market as well. Sam's Club started offering a health discount program to its members last month.
The program, run by California-based Health Allies, provides access to services that are not typically covered by insurance, such as cosmetic dentistry, hearing aids and vision services.
In the first few days it was available, Sam's Club said it was one of the top five services it sold.
"It's very difficult for everybody to afford some health care options," said Pat Quinn, member services manager for Sam's Club.
Although the state of California changed the market for small group insurance a few years ago, which made health insurance more readily available to small businesses, problems persist. Many companies, large and small alike, have difficulty affording the premiums or can only afford scaled-back plans.
UNION-TRIBUNE STAFF WRITER
April 20, 2005
Costco, the popular wholesaler of all things huge, plans to add individual health insurance to its array of products and services in California in the next six months.
The Issaquah, Wash., company has sold health insurance to some of its small-business members in the West for several years and plans to add individual plans for its general membership.
"We realize we don't have to be everything to everybody," said Patrick Callins, Costco's vice president of member services. "We are looking at programs where we can help people save some money."
Because many people are struggling with the high cost of health care, several retailers are carving their own low-cost niche in the market.
Callins said the company is able to provide lower-cost health insurance – 5 percent to 20 percent less expensive than what members could buy on their own – by creating an efficient market to sell them.
The company said it creates the savings by selling a plan with large deductibles and co-payments and at the same time eliminating the commission that agents might otherwise get for the sale of the plan.
PacifiCare Health Systems designed and manages the two PPO plans Costco currently offers.
Costco is still developing the individual plan and declined to discuss its details.
Callins said the company's services, from merchant credit card processing to health insurance, are designed for what Costco said is its core membership – the small-business owner.
Martyn Hopper, the California state director of The National Federation of Independent Business, said, "It (health insurance) is the No. 1 concern of small-business owners."
According to a study by the Kaiser Family Foundation, more than half of small firms shopped for a new plan in 2004, compared with 37 percent of large companies.
Jill Peterson said she looks to Costco for nearly everything for the small business her husband and his partner run. The company, Mikelson Yachts in San Diego, was self-insured, which was getting expensive.
So when Peterson, who handles the administrative issues for the company, was evaluating other options, she said it seemed natural to look to Costco.
Peterson said she couldn't recall the exact cost, but said it was less than they spent before, and an insurance agent told her he couldn't make her a better deal.
Other retailers are targeting the small-business market as well. Sam's Club started offering a health discount program to its members last month.
The program, run by California-based Health Allies, provides access to services that are not typically covered by insurance, such as cosmetic dentistry, hearing aids and vision services.
In the first few days it was available, Sam's Club said it was one of the top five services it sold.
"It's very difficult for everybody to afford some health care options," said Pat Quinn, member services manager for Sam's Club.
Although the state of California changed the market for small group insurance a few years ago, which made health insurance more readily available to small businesses, problems persist. Many companies, large and small alike, have difficulty affording the premiums or can only afford scaled-back plans.
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