Once Upon A Redecoration

Phyllis Diller portrait
Image via Wikipedia

“Beige is atmosphere. It’s bisque, it’s ivory, it’s cream, it’s stone, it’s toast, it’s cappuccino. It’s, well, it’s magic.” Albert Hadley, The Story of America’s Preeminent Interior Designer

Spring is here – or at least it has been rumored to be skirting the tri-state area.  There is stirring and restless, frenetic activity in the woods as another generation of flora and fauna stretch into the longer days of April.  There is resurrection in the air and repair everywhere – stonewalls, gutters, and roofs damaged by a bloated winter whose derriere squatted longer and harder on the Northeast than in years past.

A charm of finches flit across my garden frantically engrossed in gathering twigs to build nests while plump, red breasted robin’s patrol my lawn helping themselves to worms and unseen insects.  It seems every living thing is rousing out of the stupor of an endless night of winter days.  It is a happy serotonin fueled time for new resolutions and projects.  Change is in the air.

It is also at this time of year that other nest builders begin to itch for change. The warning signs are subtle and hard to discern from the normal cadence of spring cleaning.   Only the trained eye of a veteran husband can detect the overactive imaginations, the incessant daydreaming and endlessly indefatigable minds of women as the lighter days inspire them to reconsider the interior designs of their home.

It begins with an almost undetectable earmarked page in House Beautiful and quickly escalates to your discovery of Connecticut Homes stuffed between the mattresses like a forbidden girlie magazine.  These periodicals are mere gateway drugs to an eventual preoccupation with Home Improvement television shows followed by long “shopping” trips where your partner seemingly returns home with no purchased item other than some benign pieces of fabric and a few innocent looking business card colored placards similar to playing cards in Candyland.  The next thing you know, some NYC metro sexual named RicKi (yes, a capital K) is inside your living room declaring you a candidate for FEMA fashion relief.

I can recall watching my mother gush with what appeared to be disingenuous praise every time she would visit the homes of friends and neighbors with older children. She would often stare at my father as she flattered our hosts on their choice of fabrics and décor.  Years later, I realized her praise was laced with anger and envy.  Raising destructive boys and a dog that preferred to urinate on the corner of her living room sofa had left her paralyzed from attempting a home makeover.

My freshman year of college, a woman that could be best described as the unholy offspring of Rodney Dangerfield and Phyllis Diller arrived at our front door.  She was a “prominent” Beverly Hills interior designer who was doing a friend a favor by agreeing to meet with my mother aka “that poor woman with the four boys”.

“ My gaaaawd! Honey, I don’t know how you have survived so long living in GI Joe’s footlocker.  I mean, it looks like Burt Reynolds threw up all over your house!” Her hysterical laugh quickly yielded to a smoker’s cough that sounded like she was going to hack up a fur ball. My mother could only respond with a nervous, embarrassed chuckle.  She quickly shot my father the “lizard look” – a squinting leer of distain that silently conveyed more contempt than any combination of words in the Merriam Webster dictionary.

The auburn bombshell proceeded into our living room surveying its sculpted olive green shag carpet, overstuffed urine stained twin floral sofas and a bamboo wall-to-wall stereo cabinet that seemed better suited to a potting shed.  My dad was not sure whether this woman was a homemaker or a home wrecker as it was clear that he was about to take the rap from my mom for her sudden epiphany that she had been living a life of squalor.

Overnight, our comfortable Father Knows Best living room transformed into a sterile showcase home only fit for women, demure young girls and clients.  An entire living space in our home became “off limits” and remained unoccupied for weeks on end.  Any living thing with hair under its arms was relegated to a postage stamp sized den.  To add insult to injury, my father was required to compensate this domestic fashionista.  He eventually came to refer to her simply as “the parasite”.

It is present day and a strange woman keeps leaving messages on our machine for my wife.  She talks rapidly and always in code. “Hi, Caroline.  I’ve got those swatches you were asking about and will leave them in the store for you.”  Swatches? I am suddenly aware of little pieces of laminated colored paper taped to the living room wall.

The beige and powder blue squares have names like “healing aloe” and “ soft fern”.  The “soft fern” color is actually light gray.   It looks more like “dead fern” to me.  There are other squares of Sherwin Williams paint that are perfumed and lip-sticked with names like “deer path“ and “baby’s breath.” Personally, all I think of when I see them is round pebbles of scat and curdled milk.

I actually have not met the happy interior design lady. I can visualize her as she parades across my perfectly acceptable living and family rooms with that puzzled, sympathetic look of a cosmetic surgeon.  “Has it always looked this way?” “Personally, I can see why you don’t want a ‘cluttered’ feel to the room.” “Cluttered” is female speak for “everything your husband finds comfortable is about to be banished to the basement.

As the home makeover escalates, it becomes physically inconvenient.  It requires me to move stuff. I hate moving things. A call from another room is like fingernails on a chalkboard.  “Hon’, I need to hold this mirror up for me.“ or  “Can you move that 500lb urn over to that corner? I just want to see how it looks.” I become a thankless Druid rebuilding Stonehenge each night at the whim of my spouse and the invisible furniture muse.  One particularly irksome request has me moving everything on the right side of the room to the left side and vice versa.  Other than potentially accommodating some ancient principle of feng shui, I can see no purpose to this exercise other than turning my L1 through L5 vertebrae into a ruptured, gelatinous kebob.

My nightly plyometrics continue unabated.  “A little higher. No higher, No lower. Just two inches to the right.” The 200lb mirror is about to smash to the ground as I near total muscle failure.  She hesitates.  I crane my neck and encourage this new location.  Actually, at this point, I would endorse its’ relocation anywhere. “Nope” she says shaking her head.  “It’s not quite right.” The mirror plunges and I stick out my shoe to protect it from hitting the floor.  It crushes my toe.  I swear and hop on one leg.  Her backed is turned.” Let’s try it over here.”

As I limp to bed that night, I have vivid nightmares of my house being overrun with green alpaca fiber bunny rabbit themed throw blankets and emerald enameled Faberge eggs.  An orange man with a feathered boa keeps trying to convince me that the latest design style is to have an empty room where everyone just stands. My flat screen TV is now the size of a postage stamp. He is chasing after me.  “Come look at what I have done to your den, it’s called, ‘Greco-Roman Wolf’.  There are animal fur throw rugs, a marble desk and I have replaced your toilet with a grotto urinal so you can pee while standing up.”

I wake up in a cold sweat and stumble into the kitchen. As I pass through the darkened living room, I can see swatches of fabric draped over the arms of chairs and sofas.  The décor demon has passed this way again. When will this end?  It starts innocently with a new chair and concludes with my wife telling me she needs a divorce because my eyes don’t match the new living room carpet? I turn on a light and mindlessly open one of a thousand décor magazines littering the coffee table — an issue of Dwell magazine.

I can’t help feeling cynical.  I mean who the hell buys Dwell magazine anyway? Who writes for Dwell – interior design people who can’t make up their minds? I open the smartly illustrated cover and an article catches my eye – simply called “ Man Caves”.  The “Hunting Lodge” theme encourages dark wood accents, such as bookshelves, and rich mahogany furniture.  The article patronizingly concludes with “don’t forget, men need simplicity, so avoid clutter. (there’s that code word again).” I surveyed the chocolate brown leather chairs, the floor to ceiling bookcase, the crown molding and midnight slate fireplace.  This would make a good man cave.

In a moment of midnight clarity, I realize I must actively participate in this remodel ‘lest I awaken one day to a family room transformed into a day spa with the stereo piping out new age, Peruvian pan-flute music. I fold the page marking the article on “Hunting Lodge Man Caves” and slip the magazine underneath her pillow.

Yep, two can play this game.

Diary of a “Husky” Kid

Pumpkin Head
Image by nickhall via Flickr

My dad used to describe kids like me as “big boned”, “solid” or “husky”.  Even at an early age, the word ” husky” bugged me as it seemed to be a verbal primer meant to gently veil an uglier undercoat adjective –“chubby”.  Just hearing the term “husky” still makes me want to suck in my gut.  Having two older brothers who could consume 12,000 calories in a single sitting and still look like extras in the remake of Angela’s Ashes made me even more self-conscious and in search of a cure for the metabolic deuces that I had been dealt in this unfair game called adolescence.

I took after my German grandfather with a square frame and large head.  It was not actually until the second grade that anyone outside of my family called attention to my unique physiology.  We had moved in our town forcing me to switch elementary schools.  I hated everything about my new school “Valentine”– its’ unisex name, it’s strange children, the long, sterile hallway that descended down to the adjacent middle school and our massive playground that would make an agoraphobic run for cover. I was a big kid for my class – often mistaken for a third or fourth grader. I was desperately lonely for my old friends the first day I was shoved out of the car and into Mrs Stone’s second grade class.

It was less than an hour before I got tagged with my first epithet. “Hey, pumpkin head!” I turned around amused, looking for the person who would be the butt of this funny word.  I whirled to confront two elfin, toe-headed boys – identical twins dressed in white tee shirts, blue jeans and red cloth Keds.  I had the sudden sensation of sea sickness as my twin tormentors merged into a symphony of abuse.  “How come your head is so big?” The slightly older brother by two minutes, David, looked at his brother, Ed. “It’s the Great Pumpkin, Charlie Brown!” Another kid wandered over as my blood pressure rose. Soon there were five kids forming a crescent-shaped peanut gallery behind my two hecklers.

I was unprepared and could only retaliate with a pathetic reference to their microscopic size.  Years later, I would regret not coming up with something infinitely more cutting such as “my dog leaves larger %$##@’s than you on our front lawn.” However, it is always in retrospect that we come up with our best retorts – – normally thirty minutes following verbal fisticuffs.

“For a guy with such a big head, you’re pretty dumb.” (laughter)

I can’t recall exactly which insult made me snap but I distinctly remember taking off after the Dillhofer twins. In a scene out of Animal Planet, I was thoroughly confounded by the twin meerkats darting in opposite directions, mocking me and shouting “pumpkin head” A teacher intervened and to my shock, five kids fingered me as the instigator.  On my first day attending Valentine school, I was marched to Miss Pratt’s office fuming and despondent.

After school, I raced home and went into self-exile behind the garage – plotting my revenge on the Dillhoefers, my teacher, the principal and anyone associated with moving their children to a new school.  I sat crying with my dog Max, a mongrel kindred spirit with Rastafarian-matted hair. He was my unconditional shadow indulging me as I sat cursing my fate and physique.

My older brother had been kicking a soccer ball against the other side of the garage when the ball lifted over the tile roof and landed in the ivy near my hiding place.  I did not move to pick it up but waited until my brother turned the corner.  In an act of sheer compassion that only an older sibling could muster, he saw me crying and asked, “What are you blubbering for, fat boy?” Thus began my journey as a husky kid.

When I look back at those pictures now, I see a happy boy who loathed running, could hit a baseball a country mile and who never met a donut he did not like. I grew into a well-mannered, husky adolescent that could navigate his way through most challenges.  I became the anchor man in tug of wars, the clean up hitter, the guy who lifts everyone else to safety but then gets caught because he can’t lift himself over the wall. I never completed a single pull up in the President’s fitness challenge and could not run a mile in less than ten minutes.

Yet, when you are 12, today is tomorrow and also the rest of your life.  Stories and parables about people “growing out of this” and “ overcoming that” are propaganda created by parents too loving to break the inevitable truth to you – that you will one day grow up to do belly flops in a local circus or perhaps haunt some stretch of woods in rural America.  “There he is ‘Big Head’, run!” As the children scream and retreat down the mountain path, the pathetic middle-aged ogre with the hydrocephalus head whimpers and retreats to his cold, midnight granite cave.

As a husky kid, my biggest challenge was clothing.  There was no such thing as elastic. In a modest family, one must wear hand me downs from older siblings.  I do not recall ever having a waist size less than 32” and was perpetually popping buttons, ripping crotches and tearing the seat of my older brothers’ worn corduroy trousers.  The advent of denim prolonged my wardrobe but could not completely compensate for my thunder thighs and U-Haul rear end.  While these attributes made me every coach’s dream on the baseball diamond, I was a tailor’s nightmare and an expensive line item in my parent’s back to school budget.

My greatest fear was removing my shirt in public.  My brothers looked like POWs with washboard stomachs and adolescent hair in all the right places.  I resembled alabaster play dough in process.  I had annoying baby fat under my arms which seem to accentuate my chest.  My brother’s referred to them as “man-boobs” – a term which I did not care for.

Summer meant the beach, public swimming pools, swim parties and sun bathing.  I loathed the fast metabolism jocks with their abs and muscle definition.  They were like relief maps with distinct features – mountains of sinew and flat deserts devoid of flab. I was like Antarctica – a large white land mass with no distinguishable features. I could not exactly pinpoint my biceps, abdominal muscles or quadriceps as they were all well insulated under a protective layer of permafrost baby fat.

Further trauma would await me in the Fall at school when we would invariably square off in basketball requiring one to either be shirts or skins.  To be go skin in middle school PE was to advertise your darkest fears to an audience of unforgiving, insensitive pinheaded boys. To further exacerbate the problem, a game might be held outside in full view of the girls who would be doing jumping jacks or running the way girls who did not exercise often ran – in a sort of headlong tumble as if they were falling down hill.

My gym teacher, Mr Stebbins, loathed me for my myriad efforts to avoid Physical Education.  My conscientious objection to sweating made him angry. He resembled an adult film star with his dolphin gym shorts, tight muscle shirt, blond sideburns and moustache.  He looked at me with sardonic disdain as he picked sides for basketball. “Turpin – skins”.  He might as well have said, “Turpin, naked!” I took my shirt off and quickly crossed my arms convinced from my brother’s chiding that I had bigger breasts than Raquel Welch and most of the girls now circling the playground with their spastic, angular lunges. For the next 30 minutes, I felt like a bowl of jello moving from one side of court to another.  I became lost in my self loathing.

My mother sensed my despondency that evening when I refused to eat dinner.  This was indeed an event as rare as a lunar eclipse.  Oblivious to my plight, I heard my father groan from the other room pleading with God to exterminate every liberal in Congress. My mother noticed I had not touched my Swanson’s fried chicken TV dinner. Her nickname was “Sodium Pentathol” because she could induce a confession faster than a priest threatening you with a hair shirt. My loss of appetite was concerning and she was determined to root out its cause.

She tried not to smile as I dredged up the last few years of frustration with my physique..  She suggested I write the pros and cons of my temporary condition on paper and when done, we would weigh the right and left sides of the ledger for balance.  I winced at the word “weigh” but agreed to consider trying to find the positive side of my weight.  Was there a constructive side?  Where was it?  Could you see it in the mirror?  At last, I agreed to indulge her.  As I pondered the positives of portly, I came up with a few “advantages”.

1)      I would be last to die in a famine or of radiation poisoning after a nuke given my slow metabolism

2)      When my voice changed, I could become rich and famous like R&B singer Barry White aka The Walrus of Love

3)      My size made me a success in any activity that involved as little running as possible. This left me golf pro, baseball player or bakery chef as potential career paths

4)      I was less likely to be injured if ever shot in the stomach by a cannonball at close range

I quickly ran out of pros and shifted to the cons which invariably revolved around girls – the inability to attract or retain one.  I had girls as friends but they treated me more like a brother or a cuddly Cyrano whose physical liabilities disabled him as a threat and relegated me to a role of trusted confidante and romantic go between.

After perusing my list of assets and liabilities, my mother resorted to what all parents do, she told me a series of lies about family members.  To believe her was to accept that my razor thin uncle who could shower in a shotgun barrel had spent his adolescence trapped inside an ugly duckling façade of baby fat.  Others in my family had also been dealt these identical character building cards and had emerged post puberty with the physiques of swans. I took the bait and began patiently to wait – scanning my own horizon lines for any signs of maturation.

True to her word, I did grow over the summer before high school and like a stunted winter plant finally stretched to new heights under the arc of omnipresent sunshine.  My body changed and with it, I moved on to the more myopic and selfish preoccupations of teenagers.  The story had a happy ending as Cyrano eventually got his Roxanne and later became a social advocate – carrying a message to a next generation of huskies whose self esteem seems more under attack from media images that perpetuate an airbrushed myth of acceptance through visceral beauty.

I still see that husky kid.  He comes around from time to time.  He rents a guest house in the back of my mind and occasionally orders a pizza or eats too many cookies.  He does not come with me to the gym and stays home while I go out for a jog.  He loves old movies, hanging out with the family and gets excited when he sees fresh bananas in the fruit bowl because it means Mom has gone to the supermarket.  He’s a kind kid.  Most of all, he understands that words can hurt more that just about anything – – except perhaps, any sport that involves running or a cannonball shot directly into your stomach at close range.

A Case for Self Insuring Small Business

Health care systems
Image via Wikipedia

During the course of 2009, two distinct trend lines crossed. For the first time ever, more employers under 50 employees were not offering medical insurance to employees than those who continued to provide employer sponsored healthcare. It was an inflection point where the majority of smaller employers – those who make up close to 96% of the number of commercial businesses in the US –  could no longer afford to offer healthcare.

Unfortunately, achieving affordability is often a zero sum game and the current system often fails the weakest and most disenfranchised of its stakeholders.  While the burden of spiraling healthcare costs has effected virtually every employer, the weight of cost increases has been borne disproportionately by individuals and smaller employers (1-250 employees).  The opaque science of risk pooling, cost shifting and risk selection has as much to do with unacceptable increases as  poor consumerism, over treatment and inefficiency. As we march toward insurance exchanges and pooled purchasing for employers in 2014, we will continue to witness a game of pass the parcel leaving smaller employers holding the bag.

Healthcare cost shifting begins at the highest levels with federal and state governments routinely cost shifting to the private sector by serially under-reimbursing specialists and hospitals for the cost of their services. Doctors and hospitals, in turn, shift cost to the private sector charging higher fees for services to make up for underfunded Medicare and Medicaid rates. Health systems have consolidated along with multi-specialty medical groups gaining critical bargaining power that results in higher contracted rate increases negotiated with insurers.  Insurers, attempting to keep rising medical trends down, must exact concessions from less well leveraged providers such as community based hospitals and primary care doctors. The result is an Darwinian landscape where only the large survive.

As core medical trends hover between 7%-8%, private insurance book of business increases have climbed into and remain in double digits. Larger employers remain more immune from peanut butter spread book of business trends due to their own unique claim credibility and in many instances, due to the simple act of self insurance.  Lack of size and actuarial credibility leaves smaller employers and individuals to be underwritten within pools of risk — pools that continue to pass on the rising costs of care at an alarming rate.  To add insult to injury, as states and the Federal government become increasingly larger medical payers (already representing over 50% of all medical spend in the US), cost shifting will only accelerate in the private sector resulting in higher medical trends impacting smaller employer pools.

Larger Employers Don’t Bear As Much Burden for Medical Cost Shifting – Larger self-insured employers are less affected by hidden risk charges, expense loads and administrative cost shifting that often occurs in pooled underwriting arrangements. Larger firms enjoy a greater spread of risk across their employees. Self insurance brings greater transparency to employers around administration and claims costs. Given that self insured employers are bearing much of their own risk, a self-funding generates less risk transfer and as a result, much lower gross profit for an insurer than a fully insured customer. Unfortunately, when risk is transferred, the elements of pricing become more opaque. It is not uncommon for insurers to build margin and other conservative factors into the rates tendered to smaller insured clients.  Individuals and smaller clients do not merit the actuarial credibility to be rated on their own claims experience. Cost shifting across each risk within a pool is an accepted practice in pricing risk. It reduces dramatic swings in pricing and is fundamental to profitable risk pooling.

Smaller employers, by definition, do not have enough medical claims predictability to be rated entirely on their own merits. In order to spread risk across a statistically valid sampling of employers, insurers pool employers across a large “block” of risk. Better performing risks subsidize worse performing risks – moderating overall increases for the entire pool. Problems arise when there is little visibility for an employer into how his/her renewal was developed and into the significant variance that can sometimes occur between the insurer’s initial renewal request and the final negotiated rate. Some argue that much of the difference is due to the rigor of the broker or client’s negotiation and the competitive pressure from the marketplace. However, the frustrating reality is the actual rate that is necessary to properly underwrite the risk, the rate the client ends up paying and the individual profitability by account varies dramatically.  Over the last decade, smaller employers have absorbed a disproportionate percentage of rising healthcare cost increases. As medical trends haven risen, fully insured risk pools have been quick to allocate these cost increases across their block of members – similar to the way a utility might pass along the rising cost of oil to its consumers.

The Affordable Care Act May Create Greater Inequities Around Small Employer Risk Sharing – Under health reform, insurers choosing to participate in regulated exchanges will be required to adhere to stringent community rating underwriting practices that will limit their ability to distinguish and price between employers representing better risks and those representing poorer population health risk. An employer who commits to driving healthier lifestyles among employees and generates lower claims experience will be subjected to the same narrow underwriting criteria as an employer with a less healthy workforce. This inability for insurers to properly reward employers for driving consumer engagement and health management among employees will drive many smaller employers to weigh the limited benefit of engaging their employees in wellness versus the disruption and distraction of attempting to promote health improvement.

Some argue these regulatory changes will homogenize pricing and create a better spread of risk for groups under 50 lives. With the individual and under 50 market having historically been the most profitable commercial segment  for many employers, some pundits contend that the ACA will limit profit taking and maximize small employer purchasing power.  Detractors believe that the diametric opposite will happen when exchanges initially are populated by previously uninsured and higher risk, small employer groups.  In either scenario, insurer profits will be squeezed in the under 50 life market segments. Insurers will have to look ” up market” to maximize profitability within their 50+ block of insured, manually rated clients.

For groups over 50 lives, insurers will be afforded more flexibility to manage pooled risks but they will be confined to a maximum of 15% of profit and administration charges. The level of precision and attention insurers must pay to underwriting their 50+ life block of insured business will determine much of their success or failure.  Price this business too conservatively and you risk losing members or having to refund rebates to customers.  Price to aggressively and you risk creating a political hot potato when asking a regulator to approve a politically undesirable double-digit increase. The optics of pricing will become very important to insurers and will become less flexible for employers to negotiate.

Pooled small group underwriting already creates inequities. As underwriters price their overall block of insured business to achieve a targeted yield (increases necessary to cover rising healthcare costs), there is typically more latitude afforded to larger insured employers whose claims experience is statistically credible. Most underwriters would argue that only cases with at least 1000 participants merits 100% claims credibility. The reality is there is discretion in small case underwriting.  Underwriters have the latitude to lend more or less credibility to certain cases if it allows them to renew a desired piece of business.

While ACA Caps Insurer Margins, It Reduces the Incentives to Control Costs – The minimum loss ratios mandated by Congress will cap potential profit taking on individual and small group coverage but it will also reward those whose clients have richer, inlfationary plan designs and higher per employee per month (pepm) costs. The maximum administration and risk percentage an insurer may realize for its larger case book of business is 15%. Thus, the greater the insured’s premium cost for a given level of benefits, the larger the actual profit dollars of operating income for the insurer. Insurers have already begun to fight over the benefit plans of certain white-collar and collectively bargained industries who have proven more willing to pay for rich plan designs – – investment banks, hedge funds, high-tech, professional services and bloated municipality and bargained plans.

Ironically, lower insured pepm plans may actually experience less underwriting flexibility as insurers seek to balance their book of 85% loss ratio employers to the highest premium plans. The only incentive to insurers confined to limited profits under ACA’s 85% MLR legislation is the specter of a public option being introduced to compete with private plans that cannot rein in costs. While most pundits seem to agree that a public option would not solve our affordability crisis, it could use taxpayer dollars and rationed provider reimbursement to offer lower cost alternatives – further eroding the private marketplace and leading to a tipping point towards single payer coverage.

As of 2011, small group increases are averaging 11 – 13% medical trends and average overall increases in excess of 20%. Insured employers under 250 employees are essentially trapped in these risk pools and it may only get worse in 2014 as community rating and the uninsured are mixed into the stew of risk.

It’s Time To Self Insure Small Business –  It is rare that an employer under 100 employees can access its paid claims experience. Insurers provide little to no actionable data for smaller employers and defend  the lack of disclosure arguing that small group claims can be easily deconstructed to identify actual employees which can be a violation of privacy rights. When claims data is released to smaller employers, it is often released as “incurred” claims which include conservative assumptions on reserves – – the future costs of claims incurred but not yet reported.

In other cases when pressured for claims data, insurers counter requests with concerns that if they release data and a competitor does not, the competing insurer can cherry-pick better risks. With the exception of Texas, where House Bill 2015 requires the release of claims experience to employers down to as firms as small as two employees, small employers have little line of sight into claims and therefore little motivation to view insurance as anything other than a commodity to be shopped every year.

Insured group pricing is often calculated months in advance. It is an imprecise alchemy where uncertainty around a myriad of factors — future medical costs due to utilization trends, hospital and provider contract renewals, H1N1, Medicare reimbursement changes and pending or recently passed regulations – – can all prompt an underwriter to build margin into rates. Insured premium pools tend to be loaded with risk charges and margin to reduce the potential that the insurer will price premiums below their cost.

In situations where insurers need to expand margins or increase profits, the path of least resistance has historically been to build margin into insured pricing. In risking increasing rates above what the competitive market might bear, carriers rely on agent loyalty campaigns, customer apathy, the hassle of changing carriers and/or their own superior cost position above competitors to allow for margin expansion. If an insurer loses members to more competitive pricing, the remaining clients may more than cover the lost margin with their higher premiums. While it is a tricky endeavor, an insurer has to weigh the risk/reward of asking for more premium than the risk may actually require. If the insurer is too conservative in pricing, competitors will seek to steal market share. If the insurer gains market share by pricing to a lower margin point, profit percentages are diluted and Wall Street punishes the carrier for being ” undisciplined ” around pricing.

Larger employers understand that medical claims drive costs. Employers with over 100 employees are increasingly entertaining alternative financing arrangements such as minimum premium and self insurance to cut the risk premiums they pay to insurers. Generally, a self-funded program generates one-third the profit dollars of an insured health program. In doing so, an employer assumes more risk. However, that risk can be capped based on the client’s risk tolerance. As a self insured employer begins to make a connection between their own population’s health, wellness and healthcare claims, they begin to focus on higher value activities — holding vendors more accountable for managing costs.

Administration costs are generally higher in fully insured health plans – as much as 20+%. These administration costs include risk and pooling charges, administration, broker commissions, clinical programs, taxes and other administration. Insured claims costs include the cost of state mandated benefits which can add 8%-10% to premiums. As premiums rise, insured health plan administration charges often rise proportionately. Self insurance avoids state premium taxes, allows you to exclude state mandated benefits and reduces risk and profit charges. Self funding has been generally ignored by brokers and agents who do not understand alternative funding and who do not like the increased transparency of per employee per month administrative fees versus embedded commissions.

With the exception of CIGNA that uses the Great West chassis as a platform for small employer self funding, most insurers have not been eager to offer self funded products that essentially cannibalize their more profitable insured pools. If this is ever going to change, smaller employers must come to understand that they are paying a very high price for transfer of risk and given the fact that costs continue to increase, there is justifiable concern about whether employers are getting value for their insured arrangements.

This frustrating cycle of pooled increases and a limited sense of control over one’s destiny is driving smaller employers – – some as low as 50 employees to give serious consideration to self insurance. With average composite costs per employee now eclipsing $11,10o, a 110 employee company is paying over $1mm a year for healthcare.  For firms operating on slender margins, a 10% compounded annual increase in pooled insurance costs will consume operating profits in just a few years.  Liberating oneself from the rigidly predictable cycle of double-digit pooled increases is only the first step toward regaining control over healthcare costs.

What Next?  – Self insurance is not a panacea for rising healthcare costs.  Simply by changing the mechanism to finance your risk will not allay underlying issues around chronic illness and problems endemic in a workforce.  However, it is the first step toward focusing on the real problem – – the cost of healthcare delivery. Once self funded, the insurer can be seen more as a partner in managing your loss costs and can more credibly position themself on the client’s side of the table. With the barriers to entry being so high in healthcare, the only player large enough to compete with insurers is the Federal government. Most recognize that a Federal government that presides over Medicare with its serial under reimbursement of doctors, excessive fraud, abuse and deficits is today hardly qualified to supplant commercial plans. The key is changing the nature of commercial insurer cost-plus, pooled pricing. When it comes to small group insurance, one could argue that the managed care industry is failing to manage care.

It is time to consider new risk bearing models that moderate profit taking and reduce cost shifting between customer segments and deliver total transparency around all administrative costs and claims experience. In addition to encouraging market based small employer self insurance solutions, we should:

1) Allow for creation of multiple employer welfare association risk pools that offer smaller employers insured and self insured purchasing leverage coupled with a defined, highly focused plan designs that drive health improvement, wellness, chronic illness screening and coaching. Instead of granting rebates, create reserve mechanisms to invest any dividends resulting from a better than target 85% loss ratio into a premium stabilization fund to offset future increases for pool participants. Require a two-year participation in the pool to prevent adverse selection.

2) Require transparency for all claim and non-claim related expenses. This includes claims administration, clinical programs, brokers commissions, taxes, fees and any other non-medical claim related costs. Insurers should be allowed to include in the claim expense calculation those programs proven to drive savings. Insurers should also disclose any costs charged to the claims loss ratio that originate from an entity owned by that insurer. As insurers migrate into health services, employers must understand if insurer costs are being included as an administrative cost and as a claim cost. Regulators must approve any administrative program included as a claims expense to make sure it is a competitively priced, proven cost mitigation program.

3) Mandate the release of claims experience for all employers down to 50 employees. Do not hide behind HIPAA as a means of preventing the release of claim data. This is a red herring.

4) Create a small group self-insured solution with a maximum liability limit of 105% of expected claims. Retention expenses might run higher than traditional self insurance but it would offer greater flexibility and a line of sight on claims cost. Consider state-run self insurance stop-loss pools offering smaller employers dividend eligible non-profit pooling.

We should not wait for Congress.  States and the private sector have the means to improve imperfect reform to achieve smaller employer affordability goals. If we cannot successfully rein in these expenses, smaller employers will accelerate dumping coverage and in doing so, shift the burden of healthcare subsidization to the Federal government, exchanges, the states that manage them, and ultimately taxpayers.

The private sector has the skill to drive many of the changes necessary to fix gaps in care, improve consumer engagement, realign incentives and drive affordable options.  The question remains whether employers have the will to take the lead in driving reform.  Should smaller employers choose to self insure, they will quickly shift from commodity buyers to value buyers and in doing so, join the ranks of those who fundamentally believe that the only real means of preserving quality and achieving affordability is market based reform.

The Cat Came Back

Old farmer Johnson had troubles of his own

He had a ragged alley cat that would not leave him alone

He tried and he tried to give that cat away

And finally gave him to a man going oh so far away

But the cat came back, the very next day

They thought he was a goner but he wouldn’t stay away

The cat came back, he couldn’t stay away, away, away

I am in a metaphysical quandary.  Although committed to the Christian theology of a ” one and done” afterlife, I am troubled by a nagging suspicion.  After several years of close observation, I am convinced our cat was a serial killer in a past life.  It all makes sense to me.  You don’t have to be an FBI profiler to notice the behavioral pattern: loner, obsessive, fastidious, mercurial, prone to torture small animals, mocks authority, and plays bizarre intellectual games.  Serial killer experts Resler, Berger and Douglas offer this chilling description: “At an early age, if the suspect is left alone, or forced to live in isolation whereby little attention is given to them for long periods of time, their minds become the object of their company, and thus begin the daydreams and the fantasy world”.

The behavioral profilers helped me interpret the disturbing piles of feathers, mounds of entrails and most recently, the eviscerated vole that was lovingly left on the front door step for Valentines Day.  Whatever it used to be, it’s next of kin would need its dental records to determine its identity.  Carefully placed next to its body was what looked like a small bean – – perhaps its heart or spleen.  It was a holiday and in my kitty’s twisted mind , she was trying to communicate with us and take part in the tradition of gift giving:  “ Spleen, Be My Valentine “ or maybe “Happy Valentine’s Day. I can’t give you my heart, but how about this one? “.  Then again,  it could be a more sinister warning.  “If I had fingers instead of paws,  ‘The Silence of the Lambs’ would seem like a Disney movie.  Let this be a warning to you. Keep my kibble bowl fresh. “

Our feline Hannibal Lecter often exhibits psychotic nocturnal behavior.  She seems to hear voices and often chases after fourth dimension phantasms and invisible prey.  What does she see?  She purrs loudly and touches her nose to my cheek. “Meeeee-ow” She may be having a sixth sense moment and crying out, “Dude, I see dead animals- everywhere.”

Our uneasy truce  is not unusual. Throughout history, cats have been revered and despised for their peculiar habits and odd, indifferent demeanor.  Domestication of cats began somewhere in the Middle East and achieved its zenith with the deification of Bast, the goddess of family, a divine spirit possessing a cat’s head and a woman’s body.  Aside from ridding granaries and households of vermin, cats were thought to have mysterious healing powers.  In the eleventh century, perhaps after a clutch of ravenous feral felines ate a local farmer’s child, the domesticated cat’s stock dropped precipitously – going from Bast to worst and ranking right up with politicians and snake oil salesman as social pariahs.  Cats were painted with a more sinister brush and associated with the devil, black magic and sexually ambiguous male celebrities.  What resulted was nothing short of a millennium of persecution and the now infamous association of black cats and bad luck.

In colonial America, the Salem Witch Trials alleged that a Barbados slave Tituba was practicing the dark arts. The fact that she owned a black cat and had figured out how to get her broom to sweep the floors -without touching it  should have gotten her a promotion. But those Puritans were a feckless and fearful lot.  Tituba was convicted of being a witch and for corrupting seven young girls — allegedly duping them into practicing the black art of witchcraft.  If Tituba was living today, she would probably have her own television show and record label.  Centuries later, animal researcher, Alain Gato pieced together the forensic and public testimony from the trials.  All the evidence now points to Tituba’s cat, Methusela, as the one that framed her.

Gave it to a little boy with a dollar and a note

Told him to row way  up the river and toss it from the boat

To tie a rope around its neck and a weight of 20 pounds

Now all that they can  tell us is that little boy done drowned

Cats can be loving warm creatures or odd fickle personalities.  Imagine if you lived with a mercurial person where every time you showed them affection they pushed you away. Yet when you ignored them, they came looking for you.  They would disrespect you one minute and then feign affection when they wanted something from you.  Oh wait, that’s a teenager!  But now imagine if this same person, greeted you as you came home, by showering you with love and then suddenly biting your hand – – only to run off laughing.  When you see them again, they pretend nothing has happened. Saying my cat is domesticated is a bit of false advertising.  What other animals remove kidneys and proudly display them like first edition stamps?  I often catch her watching me as if she is sizing me up.  “Oh, yeah, I could definitely take you.  I would eat like a queen.  But, who’d open the cat food and clean out the litter.  You are safe for now.  On the day of my choosing, you’re a dead man.  After that, I  buy a pound of cat nip from the tough tabby Melon across the street and we have that wild party.  Perhaps I might even take a three legged dog hostage and torment him”.

Man on the corner swore he’d shoot that cat on sight

He loaded up his shotgun with nails and dynamite

He waited and he waited for that cat to come around

Nine-seven pieces of that man is all they found

A few years back, we asked a male friend to watch our house and feed Lady MacBeth.  Our cat despised him from his first “I love cats.  We’ll get along fine”.  The first night he returned to our home from work, he found a carefully positioned cat poop on the middle of the bed in which he would be sleeping.  The only thing that was missing was a note that said, “ Yur next” in second grade handwriting. Each night, she chose to do her business on the bed until he finally waved the white flag and only returned to the house each night to feed her.

Cats are like spouses, they always get even.  They will foul your nice linens, shred your furniture and swat your car keys behind the dresser.  I am always nervous when I clean out the litter box ‘lest I dig up a human hand or a missing person’s wallet.  Cats will come up and rub against you, seemingly asking”Is everything ok?  You look a little tense ?”  I can only imagine what goes through the mind of a rodent.  There must be an entire night gallery of horror stories shared by our local rodent community.  Tales of  vanishings, disembowelments and ritual killings so grotesque, it causes the younger rodents to stare at the ceiling all night, wondering if that hairy, psychopath is somewhere in the vicinity.  Squeaked one mole, “ I heard she killed a dog “.  Another squirrel chimed in – – “It’s worse.  She killed a postman and a UPS guy”.  Sadly, even serial killers have a deep bench of those that would vouch for their character.  In my house, it seems the mice and I are the only group that thinks something weird is going on.

I just got home from work and the house is deathly quiet.  It’s just me and the cat. Even the dog, who she has come to loathe – is off on a run with my wife. The feline  is sleeping on a pillow near a book that has fallen from the shelf.  The title? In Cold Blood by Truman Capote.

Could she have been?………………….Nah.