Drug Lords

If there's an ailment, there's an ad for a prescription drug aimed at fighting it – from toe fungus to impotence.

Prescription drug advertising has swelled to a $4.8 billion industry since the U.S. Food and Drug Administration relaxed its restrictions on the ads in 1997, allowing for descriptions of the drugs' purpose. Many doctors say the ads are coming so fast that they don't have time to learn about the benefits and risks of a new drug before patients start requesting prescriptions.

Thanks to the internet, patients are not only diagnosing their ills but come prepared to prescribe the treatment. All the doc has to do is collect the $20 copay and write out the script.

What is wrong with this picture?

Dr. Melvyn Sterling, an internist who practices in Orange, attended the medical association meetings that led to the policy changes. He said people should consider the source when reading or watching drug ads.

"The reason those ads are there is to sell the drug, not to educate the public," Sterling said

I am shocked! Next we will be hearing all those car commercials are not about educating us on safety but rather to sell cars.

Patients should be aware of safer, cheaper alternatives, doctors said

Unfortunately, too many people don’t want alternatives; they want the latest and greatest . . . especially when it only costs a $30 copay.

"The ads sometimes are for very expensive drugs when there are much less expensive drugs available that the patient should try first … A lot of patients are looking for that magic pill. "

And magic is nothing more than illusion.

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M.I.B. II

I have received a reply from my correspondent, explaining the circumstances and issues.

Turns out, an application for health insurance was recently turned down because of discrepancies between the app and the medical records. Apparently, the applicant’s physician had included several health-related problems in the records, none of which were applicable. Some of these were quite serious (COPD, for example, and hypertension). All told, there were 10 such discrepancies [ed: no wonder the app was declined!].

So, after reviewing all the “problems,” my e-friend met with the doctor, discussed all the items, and agreed that they needed to be corrected. Subsequently, the doctor documented this for his patient, and this letter was forwarded to the insurer. At this point, no word has been received from the carrier as to whether or not this will affect its earlier verdict.

But that’s not the end of it. My e-friend is concerned that the declination has been reported to the afore-mentioned MIB, and will become a permanent source of problems for future insurance applications. For now, COBRA is in place, so there is at least a safety-net in place during this process.

Okay, so what’s my role in this?

Along with Bob, I spend some time each day helping folks at an insurance-related consumer bulletin board. My e-friend read some of my posts, and thought that I might be of help straightening out this mess, or at least supplying helpful directions.

Which I have done.

I explained that the MIB has an appeals/corrections process, which consists of writing them a letter and waiting for a reply. I suggested that such a letter be sent, along with a notarized list of corrections provided by the doc. I also suggested a follow-up phone call, and posited that this will not be a speedy process. Lastly, I suggested that the whole bundle be sent in such a way that it could be tracked, and with a way to confirm delivery (signature, etc).

The next piece of advice was to avoid the initial carrier altogether (for a number of reasons, none of them really relevant here), and to seek the counsel of a professional, independent agent with a minimum of 5 years experience in the health insurance field. Since I have the privilege of knowing quite a few “good guys” all around this great land of ours, I offered to help find one if necessary.

Finally, I suggested that it’s not always necessary (or even desirable) to keep an entire family on one’s COBRA. Sometimes, it’s better to “spin off” other family members to a separate policy. Again, a pro will be able to help determine this.

At the very least, this is an interesting experience. It’s nice to be able to help out, and it’s also nice to have the opportunity to learn more about agencies like the MIB. In fact, Bob sent me a gaggle of links on this subject, which I’m starting to go through even now.

As my correspondent has promised to keep me posted on any progress, I’ll pledge the same to you.

UPDATE: Have you ever heard the term "Common Knowledge?" That's where everyone just knows that such-and-such is true, or that so-and-so is a genious, or whatever, but then it turns out not to be true at all?

Well, like many of you, I just "knew" that MIB is notified whenever a company turns someone down.

Turns out, that's just "CK:"

From: MIB Info Line [infoline-at-MIB.com]

To: insureblog-at-hotmail.com

Subject: RE: Declinations

An MIB Report does not indicate the amount of coverage applied for or if a policy was issued, declined or charged an extra premium.

Interesting, no?

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Something Different: Carnival Wednesday

Over at Raising 4 Boys, host "Dad" presents this week's Carnival of Personal Finance. Each of the 38 posts is neatly summarized.

I thought this post from Debt Free, on pre-paying one's mortgage, quite interesting.

Dominick at Trader Knowledge has the 3rd Edition of the Cavalcade of Risk. He's done a fine job of organizing the posts, and he's included helpful notes about each one.

As one who's always found the Worker's Compensation system to be mysterious yet unncessarily complicated, I found Jon Coppelman's post on workers comp and the Supreme Court to be quite fascinating.

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Today's Beef

I am fortunate that Hank allows me to post here without censorship. After today, that may change.

There is plenty that is wrong with the health care delivery system, and the risk management side, but all in all it works better than it should and much better than socialized systems in our country and others as well. Most of the complaints about health insurance can be summed up in the immortal words of Pogo.

We have met the enemy and he is us.

We, as consumers, are truly our own worse enemy. We fail to understand the dynamics of health care and health insurance pricing and then complain when we can’t get what we want. We make demands on health insurance that would, in other situations, be considered foolish and then complain that the price is too high.

When it comes to health insurance, consumers want doctor visit insurance, prescription drug insurance, and yearly physical exam insurance. We have been conditioned to believe a doctor visit really only costs $20 and medicine is $30. We also want our annual exams covered under a copay, even though females are the only ones in the family who go regularly.

We believe nothing bad will ever happen to us, but if it does we have comfort in knowing we only have to satisfy a $500 deductible.

All of this luxury comes at a price. A price few can afford and even those who can afford it are unwilling to make the sacrifice. A family of four in Atlanta will pay about $1000 per month for the plan described above. For many, that is a house payment.

That is $1000 per month for a plan that will rarely be used, even for minor ailments and will still cost you around $3,000 in out of pocket expenses on a major claim.

That is $12,000 per year in premiums plus incidentals in a “good” year; over $15,000 in a bad year.

Contrast that with a catastrophic plan that will discount your doctor visits by 40 – 50%, discount your prescription meds by around 30% and limit your out of pocket in a calendar year to $5,000 if you have a really bad year from a health standpoint. The premium for this plan is about $250 per month, or $3,000 per year. In a “good” year you save almost $9,000 and in a bad year you still save about $7,000.

Now will someone please explain why most people would rather have the $12,000 plan over the $3,000 plan?

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Health Reform

From Blue Oregon we find this entry . . .

The proposal is very simple. All health insurance plans offered in the State would be available to all people who are residents in the geographic areas served by the plans

This already exists in one form or another. HMO’s are limited by county or zip and can only serve a specific geographic area. Some states mandate community rating which accomplishes some of the same ideas. All those who apply for coverage within a defined community pay the same rate, regardless of age or health.

Throughout the various modes of employment you retain the same insurance, and pay the same rate that everyone else pays

This is a perfect description of community rating which never works. Why would a healthy 25 year old want to pay the same as a 55 year old with emphysema?

The new system simplifies health insurance procedures and reduces process cost across the state, and this offsets the new cost of the firms coordinating insurance benefits. Going from decentralized to centralized insurance benefit administration gives us the opportunity to streamline and automate the total process of benefit administration throughout the state

Basically, this is the way the current Workers Comp system works . . . kind of. All workers in the state have the same benefits even though they are administered by different firms. Rates vary from employer to employer depending on payroll, industry, job classification and other factors.

Of course WC is not 24 hour coverage but only addresses on the job injury.

Under this proposal, it is possible that health insurance costs might go up slightly, since we would be covering people who currently are not insured

More than possible, it is a sure bet. And “slightly” is an understatement.

This proposal obviously does not solve all problems with health insurance, nor does it address many of the cost drivers in the medical system

Actually it does not address ANY of the factors that influence the cost of health insurance.

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Independence Day Capitalism

The July 4th edition of the Carnival of The Capitalists is up, hosted by My Money Forest. With over 50 entries, you're sure to find (at least) one that piques your interest.

As one who has always believed in treating my clients the way I'd like to be treated, this post at Trizle really hot the spot.

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