Tape #218 - INSURANCE PURCHASING GROUPS

 

The large business that have a multi state presence they really don’t have many problems they have the size that they basically can get what they need in the prices that work for them the small group market in Nebraska law and I am not sure about other states is defined by 2 to 50 people and the individual market includes anyone whose buying insurance on their own for example when I went in to buy insurance I was a family of one and as a family of one and a voice of one there aren’t many choices there aren’t any negotiation options its here it is take it or leave it and there wasn’t a lot of market advantage now when the Clinton's first came into the administration ;there was a tremendous focus of the problems of insurance and you probably remember that there was a lot of talk about the cherry picking the dumping you know you use your plan and all of a sudden you paid premiums for 30 years and use your plan and boom, you were denied you were off  the plan.  There was a large focus and from that focus there was a tremendous amount of reform that made a lot of those problems go away but they went away in the small group market they continue in the individual group market so our goal with this project is to take people, the farmers, the ranchers, the ag producers the self-employed anyone who works for a company part time who doesn’t have benefits anyone who is not part of a group the goal is to move them from the individual group over to the small group so they can enjoy the reforms and the changes that have happened here.  First of all why did I start working on this why is there such a huge need and what are the facts?  Health affairs is probably the premier health policy journal in the US its put out by George Washington University which I think some women were going over there this morning and I think Casey is living there this summer.  But there research in May/June of last year showed that insurance premiums between 1987 and 1993 increased 90%.  And I don’t know about you guys but our salary and our ag income did not keep pace with that.  Did yours Casey.  According to the congressional budget office the agricultural industry has the highest rate of uninsured in the US 33.3% the next highest are the construction workers at around 27%.  So it has been a problem for a long time the reason that its a problem is because people fall in that individual group and in our state 10 to 12 % of Nebraskans are uninsured.  Now I’d like to qualify that by telling you that I believe there are many many egg producers that in order to be able to have health insurance security by high deductible plans I ‘ve talked to lots of them they might have a deductible of $5000 that they need to meet for 2 or 3 people in their family.  So they’ve got health insurance but they are under insured because they couldn’t meet that the deductibles are too high they’ve got to have that safety net and they recognize that.  So even though we are only 10 to 12 % underinsured I think the underinsured is much much higher.  I’ll have to apologize, I had the wrong note at the bottom there, I’d given the wrong group credit for this and last night about midnight in my room, I was erasing it with my eye make up remover.  So it kind of worked but anyway.  The individual health insurance market covers 10.5 million Americans under age 65 Its the fastest growing market out there this is our GAO information and actually from Oct 1997.  The mountain plains states, Nebraska, Iowa, Montana, North Dakota and South Dakota have percentages that are more than twice the national average again this is because we are strongly aggrian states and we have a lot of people who are self employed in that individual market so its more or a problem for the more aggrian states and RPRI which is headed up out of Nebraska RPRI stands for Rural policy research institute out of the university with Sam Cortez and John Allen their research showed that regardless of the reform that’s happened there continues to be price advantage for the large group there’s differential price and small group insurance and large group in spite of the insurance reform and this price differential has a strong negative impact on rural employers they just don’t have the breaks they need to be able to off er insurance for themselves and their families.  Another statistic from the GAO the individual health insurance market is the fastest growing sector of the insurance markets of those three blocks of markets that we talked about earlier and this very important and the reason why is because we’ve come through an era of companies really grasping for efficiencies and as they do that they downsize, and they downsize and try to decrease expenses their taking employee their families beneficiaries off insurance plans their bringing on a lot more part time workers that they don’t provide insurance for so it is the fastest growing market and even though we haven’t had the advantage of that in the past to get some reform I think that will change because the problem as that market grows the problem will grow another reason there have not been successes in individual market reform it has the highest profits the highest profit margin for the insurance industry is in that group and the lower rates of insured have an impact on rural community I think I have another slide to qualify that.  Nope that’s not it its the next one the red.  What I mean by the impact on rural community is first of all in terms of the agricultural sector how many people taken an off farm job for the benefits yeah, I work at the state office building in Lincoln and I live in Gordon its 420 mile commute and as I end Lincoln and working in the state office building I’ll bet at least 50% of those workers are there for health insurance benefits its a huge huge problem and as the people go off the farms to take jobs for the benefits it does impact agriculture it does have an affect there’s a ripple commuters out migration my home town of Gordon Nebraska there’s a lot of cars that go out of those city limits at 7a.m. every morning for a job somewhere else that has benefits as they go they take their shopping dollars with them they do everything they need to do before they come back at night so that hurts your local businesses another thing that people don’t think about is families that really need insurance they might commute out once and never come back they might not be able to afford to live there if the can’t have that high quality job with insurance the jobs that are there that have insurance job lock is a reality, I don’t care what people say it exists people do need a hold on jobs for benefits and if we had a solid secure safety net of health insurance I believe we would have better jobs and a more competitive work force I really believe that and I think that would strengthen our rural communities and recognizing this the northern great plains rural development commission was put together by congress in 1995 there were 10 members from 5 different states North Dakota, South Dakota, Nebraska, Iowa and Minnesota and I was one of the members from Nebraska I chaired the rural health task force in the project that were going to tell you about in a little bit is actually one of the recommendations that I carried through that process we had a lot of interest from both Robert Wood Johnson and the Kellogg Foundation and working with us to help us implement this project on a multi state basis.  Tools that we needed to help people come together to buy health insurance actually had enabling legislation past in Nebraska in 1994.  The bill number was LB1222 and it simply allowed people to come together solely for the purpose of buying health insurance there was no other reason for these people to be together and the main reason insurers have not allowed that in the past was that they always said we have to have a common employer so by saying that these people are just together for buying health insurance allowed them to supersede that issue the laws extremely simple and those of you who read legislation and work with the legislatures it was just really a gift it was like two lines in a bill first of all like I said it allows people to form groups just to buy health insurance there must be at least 25 people that’s the minimum obviously the bigger the better they must have a business structure they must have a mission statement and some policies that they are defining in their articles of incorporation that they are just together to buy insurance and no other reason and they must buy a comprehensive policy they could not come together and buy a dental plan or a pharmacy card or a vision plan they must by a comprehensive policy now that’s not to say that once they gain success that they couldn’t add benefits on but to begin with they must have that comprehensive policy so its very simple the one thing that we have told people as were working on this is that we are not selling a plan and there was some concern that it would ve viewed that we were out selling insurance plans but I don’t sell insurance and I don’t want to become an insurance expert Casey do you want to sell insurance We are not selling a plan were simply facilitating the process to help people come together to buy their health insurance again the goal is to move people from the individual market over to the small group market and I think the co-op its a purchasing co-op in the purest form and that is a model that is very comfortable and makes a lot of sense for rural people to simply come together to gain the market advantage of having a group purchase and as a group of several families you certainly have a lot more market focus and economy than you would as an individual the benefits in brief why would it help people to join this, first of all as I said earlier the economy of scale increased buying power and increased choices when I went in to buy insurance when I was voice of one the paper was laying on the table the options were all lined out and there was no negotiation it doesn’t matter how much you know or where you’re living or what groups you’re working with you are still buying an individual policy and there was no negating power there so it certainly adds to that.  One thing that I have not addressed yet are writers and pre-existing conditions and I want to step back and talk about those now because for the most part if you are young and healthy and you are buying an insurance plan the rates are pretty affordable but as you use the plan things get attached to your plan when you change plans then called preix and I want to show you why flip up the next slide and I’ll show you why I want to talk about that yeah this is why I want to talk about that as I said earlier my sons are all very healthy their all stars their athletes and I am going to pick on Jake who’s here today because he certainly has been the model poster child for this project Jake was diagnosed with allergies and asthma when he was 4 he’s never had an asthma attack he’s never been in the emergency room he has never been in a doctors office with an asthma attack he’s never had emergency intervention from the medical field he’s never had a problem he’s never been hospitalized and yet once the diagnoses of asthma and allergies came on our plan we couldn’t get rid of it every year I would write the insurance company and we managed his symptoms but because we had a pre-existing condition or writer whatever term you chose to use on the plan anything that we did to manage his symptoms was not allowed to even go toward the deductible so in essence it was just straight out of pocket expenses and when I would write the insurance company this was before Kennedy Kassabam I would ask could we please get rid of these writers this year and they’d go over everything and they would write be back and say no were sorry we cant and after the 3rd year they would just write back and say no we don’t have to but after Kennedy Kassabam passed now with Kennedy Kassabam the law that passed last year even in the individual market insurance companies can only hold preexisting conditions writers for 12 months and if you no after 12 months when I finish my story I think it will probably come back to what your problems are new policies can’t be, you know its 12 months and that’s what happened to us when Kennedy Kassabam passed I called the insurance company and I said could be please get rid of these writers Kennedy Kassabam is the law of the land now and the wrote back and said well it just passed you’ve got 12 more months so at the end of that 12 months I called them up and I said okay its been 12 months under Kennedy Kassabam can we please get rid of these writers they said your plan predates Kennedy Kassabam, if you want to get rid of your writers you will have to drop your insurance and reapply we might not take you , but if we do your rates will be much higher so that’s kind of what’s been going on there was an article in Newsweek was it November I believe it was February or March of this year Jane Quinn Bryan or Bryan Quinn, I am sorry I should have brought it with me but anyway she’s the financial writer for Newsweek and she was so bold as to just say that the individual insurance market is so broken that it probably can’t be fixed and the reason is with the new plans that can only hold the preexisting for 12 months what they’ve done as they get applications the premiums are huge so in effect they have removed that market so its a tremendous problem but this is why I started Matt on the left in the red shirt he um, we thought we were being really smart, when you live in a rural area you drive a long way for a specialists Matt had a problematic cough so we had him tested for asthma when Jake was down there and he has the diagnosis asthma which now then became a part of his record he never had any problems either but he still has that preix my youngest son had ear infections and ended up with tubes in his ears which the insurance is sure relates to allergies so he’s got all of these writers so even though we’ve got a really healthy family were paying for insurance that we essentially didn’t use unless we had a catastrophic illness could be go back to that red slide again I just wanted to clarify the Kennedy Kassabam law that before Kennedy Kassabam writers could stay on as long as the insurance company deemed they were necessary after Kennedy Kassabam they could only be held for 12 months now an important part of becoming part of a group if you are in the individual market and you become part of the group and you maintain insurance coverage consistently and continually for 12 months and then say you were part of our Nebraska plan and you moved to Kansas well you can’t take that plan with you to Kansas because it based on Nebraska law but if you have that coverage for 12 months then when you move you may not be writered again if you get insurance right away they, that um insurance can not put preexisting conditions or writers on that policy so there are safety nets you know if people are changing and going from a group back to the individual market. He probably could but I too would recommend you not change I mean these laws are if he becomes part of a large group (question, can decipher) Those stories are so sad and I you know and if there’s an opportunity to participate in a group that you could assure would maintain that coverage I ‘de hate to see you change and then you know if the group went away and that has happened to people it is so important to have that safety net it really its a difficult situation so again going back to the reasons for forming a purchasing group is to improve benefits you can get more coverage for your dollar and potential savings now these similar laws are on the books in 12 other states 12 to 14 and in some states their working very well, California dn Minnesota have been very successful in fact in Minnesota there’s one of these groups that started and as they build their critical mass they used to go to the insurance companies and here is the characteristics of our group you know what will you charge us to provide this type of insurance and now the insurers go to them and they set the market they say heres our book of business heres what we want this is what we will pay so they’ve  completely flipped the purchasing buying market there by coming together and working as a group we made a list of  people we thought would benefit from this and essentially this includes the people that would fall in that individual market ranchers and farmers agricultural producers anyone who is self employed anyone who runs a small business home based businesses part time workers employees of small businesses that do not provide insurance and communities again going back to the notion that a higher level of your population that has insurance you’re going to have a more stable rural health infrastructure and I love our physicians who serve our rural community but if we couldn’t pay them I don’t think they would stay they have family obligations so that the better that we can assure they can maintain their you know collect their bills the stronger our communities will be I talked earlier about risk management I don’t think um risk management is extremely important for agriculture but also those new start up businesses and I like to talk about cabalas in Nebraska you have all heard the cabalas name we’ve got to be able to allow people with a dream to continue to working to p pursue that dream and build those great businesses because if those guys had to quit doing what they are doing in the basement of their home we would have never had cabalas if they had to go take a job for insurance benefits so the more we can provide these types of benefits the more entrepreneurs successes we can support in our communities entrapraneuralism is so important for a rural community um I put this up because there’s a paragraph lets see second paragraph from the bottom one of these conditions was a need for better health insurance and this goes back to again we all raised our hands how many people do you know who have off farm jobs to maintain insurance coverage it is a huge problem generally the way the process works to implement an insurance purchasing group is one form a group adopt by laws and a mission statement which define again why you are together which is to buy health insurance second work on recruitment the bigger the better the more the numbers the stronger the group the better your negotiating power and your buying power three I said earlier I didn’t want to be an insurance expert I assume most people don’t and um we don’t think that these groups should have to go out and become experts themselves so the way the process is structured is if they would contract with either an insurance expert or sometimes you call them third party administrators and in the insurance industry there’s a licensure exam a couple steps above insurance agent that qualifies them to become a third party administrator but they don’t have to have that license but in essence what this person becomes is your insurance expert for your insurance pool or your broker they are going to go out and negotiate on your behalf they will work for that group to get the best deal they can the group will then work with this broker and define the types of coverage they want and Casey and I always call it the Volkswagen, the Chevrolet and the Cadillac put together some group options of pretty basic plan that would define the Volkswagen a medium size would be the Chevrolet and do some add one go ahead and put in some of the extra coverages that you would deem a higher cost plan and have the broker take the characteristics of your group, go out to the insurance industry and um represent you to ask for bids as they solicit bids it becomes really educational and informative to see what types of costs come back and there are points of negotiation again the bigger your group the better the negotiation abilities as you work through what coverage you will achieve and then at the end of that process the group either accepts the bid or they start over and try to find something that they are more happy with I am going to start talking about how we started these in Nebraska and as I said earlier I have been working on this for about 5 years now cause I had a problem and when I was asked to take the position of assistant director of agriculture recognized the importance of this to agriculture I asked my boss Larry Sitsman if I could bring this project with me and continue working on it knowing that agriculture was in that we were unfairly disadvantaged int he insurance market and I really appreciate that he’s allowed me to do that so  as I started working with Larry we worked in the rural development commission um extension service we had about 8 different groups, home based business association, inner church ministries of Nebraska health coverage is a huge problem for the church and their staff.  University of Nebraska medical center, real health association we all teamed up and we requested an LB144 grant to see if we could find interested communities to facilitate and get 2 or 3 of these going in the state extension did the first they led the first effort and they got together a group of people and said ok we’ve got LB1222 on the books passed in 1994 hasn’t really been used why? And our answer to that was well its on the books but how do you do it so working with extension the tools of how so you do this and they came up with a video tape as well as the ned fax guys they put together and have about four big packets of those somewhere between here and Nebraska they were supposed to be here today so we could share those with you   throughout the conference please check the wife table and she’s gonna let us if they get here this week which they should we’ll put them out on the wife table so anyway we put together and neb fax guide and a video tape and at the end of that process extension offered to do some radio ads across the state saying this is something we can do if you’re interested in participating please call 1800 and then we took a dot map and just did dots where ever those calls came in from there was a large amount of interest in the Kimball Scotts Bluff  Bluff  bluff area there was also a large amount of interest in Carney and we approached those areas and asked if they would be interested in wanting to start one of these and they agreed so we started having informational meetings at the end of Apr Tim Hall whose the insurance commissioner for the state and I went out and we did a general first step meeting and provided the information on what these groups were and how they could work and then just asked the communities would you like to do this and they said yes we really would you please help us the significance of having Tim Hall there I can not tell you how important that was to have the credibility to have the leader of the insurance community stand up and say yes these are important they work whatever you guys want to do we will do it this year that gave us the level of credibility we needed to move forward now I am going to turn it over to Casey. 

 

There are two interns in the state of Nebraska that helped out Sidney and getting these pilot projects in the state of Nebraska actually established one was Camey Post who was out in the Western panhandle part of the state of Nebraska and then the  bluff area and I was in the Carney area which is the south central part of the state I am a senior out at the University of Nebraska at Carney and am majoring in aggor-business and communications and Sidney originally approached me this last Christmas break when I was working out at the Department of Agriculture on Christmas vacation and so she asked me to accept this job as a intern and my primary goal was to see if we could get one established in the Carney area and simply do this by going out in the Carney community and talking to organizations and service clubs and establishing what were doing  why were doing it and how were doing it and by using that three step process we were actually able to form a group and so I accepted the position and without knowing anything about health insurance and I’ve uh its been a learning process no doubt I ve talked to my advisor and I got some college course credit for it as well but um our story was a success and I worked on it for about 4 months and primarily I did this by first of all determining who were the key players in the Carney area and so the Carney chamber of Commerce was a key part in helping this actually get established in telling me who I should talk to and who do I need to that has pulling power in the Carney area that can actually and reach the community and reach the public and tell them and actually invite individuals who are in the individual health insurance market who are underinsured or are uninsured and actually bring them into the group and give them an opportunity and help them out as far as health insurance goes so I talked to about a dozen different organizations and I always enjoyed public speaking in high school and I decided to pursue it as one of my majors but I found out the true challenge is actually answering the questions and so I would uh, occasionally I would deliver a co presentation with Sindey and she would just nail off the answers right away and so um before I give a presentation I would just study and study and study and so when I would go to the group and they would actually ask the questions the first thing I would say was I’ll be honest with you I am an intern I am just learning about health insurance but I’ll do the best I can to answer your questions but what I found what many of the questions were similar and because the questions were similar I made the assumption that everyone has the same types of problems um you know with the health insurance premiums increasing by 90% with 33% of the nations people in agriculture underinsured obviously this was a high problem after talking to the organizations I made personal phone calls contacting people who were interested telling them when we were going to have our group presentation and actually talk about this group and see if they would actually want to become a part of the group I contacted the media which was the key part in this process talking to agricultural radio stations as well as out in the western panhandle they did interviews with TV and newspaper articles were also crucial and it was actually the media and the political champions who actually made the people respond to make the people call back to my dorm room and I ‘de come back with about 10 different messages and they would say there’s something about the health insurance and to help out people in individual insurance market can you give me some answers can you tell me what this is actually about and so as time progressed there is in fact some individuals who said that we weren’t going to be successful they admired our courage in going into this but they frankly told me on the phone this is not going to work for you and they said its not going to work out um and so I keep telling Sindey we have got to call these people back and say it did work we were successful and so um that was the greatest part of the satisfaction was knowing that it actually did work and again it was because of the pulling power of the people int he Carney area talking with people talking with people in the Good Samaritan Hospital the Executive Director he told me he said you know if you’re going to provide insurance to individual insurance people this is the way to go contact the actual public and for a purchasing cooperative he said this is the best way to go about it again with their support of these people as well as the political players the key part was starting low int he Carney area and moving up to the state wide area and with that why then I’ll put up the first overhead so in April we had about 70 people that showed up we simply gave them he presentation and told them about it and then on June 9 we gave a presentation in Carney of the people who actually said they wanted to become a part of the group and this time there were um approximately 100 people at that area in the group who said that their interested so at this first meeting we said we adopted by laws and the constitution simply stating the organization was formed and that’s its established and this is our orders that this group will abide by we elected a board of trustees who were kind of like the cabinet and actually the people who will make sure that they keep on top of things and be responsible for contacting the third party administrator we defined the time frame and the goals as to when the group will actually propose for a bid and this time frame is actually set for September which is actually ahead of schedule what we originally intended and we set our goals as to what we wanted to achieve by each separate meeting and finally the requests for proposal and the contact for the insurance expert or the third party administrator who can go out in the individual health insurance market and bring back to the group these different insurance plans that the group can choose from and the results as I stated there were two sites one from the Carney area and 200 to 250 members in each group only after 2 meetings and so again the media contacts the pulling power in these two areas are key and we gave a multiplier factor of .8 and basically teats stating for every one member in the group they will influence 2.8 people and so by as time increased we would expect these groups to be at 560 to 700 members which is obviously stating that there is a need and these people do need some type of health insurance and this is the way to go about it as far as the future is concerned I am very optimistic and I think you had to be optimistic about this at the very beginning I know Sindey was and its because of her expertise and actually looking at the Kennedy Kassabam law and determining what it was that this law can provide to Nebraska and actually pursuing this project Nebraska was successful in these projects and there’s articles to actually show it and there are several different articles this was in the Carney Hub one week end additionally here are other articles and I believe that this was successful in Nebraska and we hope it can become a multi state model not only for our nation but hopefully for other countries as well who says that Nebraska or who says that this nation is the only country that needs these types of insurance groups we believe this is something that can become a global issue the economy is becoming more global I think this is something that was addressed in our state but in other states as well there aren’t only local newspapers and organizations but there are state wide newspapers and magazine that actually address this issue in fact regional magazines too in fact I think Successful Farmer did one then they said a regional magazine in the mid west that addressed these problems It was in the Omaha World Herald which in some cases reaches into Iowa as well and so although these articles that contacted the people as the people champion Governor Ben Nelson is a Governor I was telling Sindey before I said we started low in the Carney area and the  Bluff area talking to the individual organizations such as the Chamber of Commerce and we simply moved up the line and as we moved up the line up into the Insurance Commissioner as well as the Governor it attracted the media in addition to the media we’ve already contacted and this actually got spread out to the group with these types of endorsements such as the media and such as these political players this was key role to our success the most frequently asked questions are what is the cost what are the tax benefits and when can people actually join.  And the biggest questions I guess the most questions came from what is the cost I can tell you from personal experience they said ok we understand what you are doing but what is the cost actually going to be and we told that would depend upon the size of the group the larger the group is the more options they can choose from.   (Audience comments undecipherable) when people join teats basically what were stating as that group progresses the chances are the group will invite more people to become a part of the group because of the economy of scale.  (Audience comments undecipherable) basically the again the goals of this IPG were to clarify the needs to show them that there is a need out in the individual health insurance market to actually identify the tools the key players who can actually help out in getting this project started, to organize the response of people calling in and actually keeping a list of them and contacting them for future times when we will hold our meetings facilitate local leadership talking to a local organization and actually being a key player in helping this group to continue indefinitely into the future this is a large part in helping us get established as well as the market response with the need out there was a large response and it was largely received by the individuals who were self employed so its been a great opportunity and were glad we were successful and their are other states who are contacting us such as West Virginia and saying what are you doing and how are you doing it and send us some information as to how you get this started.  Washington has called us to.  We going to run through together what we think we have learned from this project, first of all we think there are three key things we learned we knew there was a need out there I knew I had a need I talked to people in my neighborhood that had the same need we knew it was out there but there wasn’t anyway to tap into a financial base to allow us to try to problem solve that need and after five years and working with various groups and different groups the ability to finally put it together is wonderful but its sad to me that big of a need wasn’t addressed for five years and so a financial base to help states address problems I think is very important as far as a team effort I think you can all see why I hired Casey its been just a pleasure to work with Casey and Tammy that local leadership is critical I mean you’ve got to have personal contact very high levels of trust and a local phone number where people can call and my goal when I was wanting to hire someone to work on this project I wanted to hire an intern I think its very important that we support the educational efforts of our youth in this state I wanted to hire people who had strong backgrounds in agriculture Casey’s is probably as strong as mine and I wanted to hire people that were in their own communities or near their own communities or had a strong established presence in that community as I stated earlier I talked about the political champions or the political players actually such as the Governor of the state of Nebraska the insurance Commissioner and these were key players in actually sticking with us and actually helping us show it through and actually leading to the success of this organization and so there persistence in this project was greatly needed as was the local leadership in the Scotts Bluff and the Carney areas.  Along with the political championship when Tim Hall the State Commissioner of Insurance stood up in front of both of those groups of 100 and said Governor Nelson and I are willing to put the squeeze on the insurance industry to make sure you get a bid that I mean that really gave us strength cause before that I hate to share with you that we had a lot of folks who said this wont work and we had a lot of insurance people call us and said we won’t bid on this so once you have the critical mass where there’s a strong market there we knew we’d get a bid but if you also have the Insurance Commissioner.  That was important, it would actually spread the risk of the individuals within the group and the numbers speak the loudest, the larger the group is, the better off the group is, and the larger the group is the more people it effects out in the area.

 

As the group grows, it's easier to grow it. I met with the board in both areas as they sent out their requests for the insurance experts.  And the Carney area, both areas have 220-250 enrollees names at this point.  The Carney area board I copied off  800 additional pieces of information that they were going to include in the co-op mailing and the semi-annual service mailings. There confident that they'll have 600 people participating in their group.  And most aquired fact is a 2.8, the insurance industry gave us that, they told us that that was a good indicator of where we'll end up.  As far as evaluating the work, we're going to do an evaluation, we've going to ask the university to do that for us.  So we can say here's the project, here's how we started, and these were the results, and have a nice strong evaluation to support that.  We want to answer the question what, what did we do, what do we need to know before we do it again, how will we find the information, and when will it be available.  To begin we're going, or the university is going to do a simple test fairly early, that will address first of all and information about that, were they formed, did insurance pools form, yes or no, and if so where, and if so how many people were out there. 

 

Did people become insured who were previously uninsured? yes or no.  And of those people who were insured before?, did they improve their spending?  And did they increase their benefits.  We also want to talk to folks who participated but did not join. Did we do some education? The insurance topic is so important, but it is also very, very complex.  I always tell people, it's like as much fun as screen doors on a submarine. And if they did not join, we want to know why?  And if they did not join we want to know why. If people are not joining, why did they not join, and possibly that information can go back to policy and find a solution for them.

 

The third area again were just the lessons learned.  I think one critical lessons was just organizing the public effort to support the need that we knew was out there.  And getting all the different facets of government.  They all have different bosses, different budgets, different priorities, and trying to coordinate those in a better fashion to truly respond to the needs of the people in the state.  And as far as public policy we worked very closely with allot of the senators that we signed onto this bill in 1994 and continue to support it.  What does need to change at the state level and the federal level to make things better.  I read in the paper on Sunday that Senator Carey is working to allow the agricultural sector to deduct fully the cost of health insurance, you know, other businesses can do that. They treat health insurance for themselves as a cost of doing business, but self-employed people can not and that's a disparity that hopefully as Senator Carey works on that they can address it.

 

We started with the dot map and the one thing that we found, the advertising the 1-800 numbers but they were not nearly as effective as having that local group, talk to their friends, and that word of mouth is just so much stronger than general advertising. 

 

Anybody who is licensed in the State of Nebraska to sell group insurance can bid on this product, can bid on this group.  Well in other states where they've used this, they have lowered costs.  And I think, you talked about your husbands pre-existing conditions just by grouping them together, your going to get a lower cost.  It might not be similar to something that somebody 20 years old wants to pay. But you can't tell me that by bringing people together that your aren't going to achieve some economy at scale.

We haven't had that and the insurance commissioner was going to do a survey of the 12 or 14 other states who have implemented this, and Cross was one of the areas he was going to address.  And I don't think he's gotten those pulled together yet.  He hasn't shared them with me.  I can't even give you a ball park.  When we had out insurance plan. We had a 1,500 dollar deductible that had to be met by three people in our family, and we were paying probably $400 a month for it, if not $450, but we couldn't use it.  I mean with all those writers we couldn't use the darn thing.  So we were paying that much money for something that we couldn't use.  So to answer your question, if I were paying $400-$450 a month for a plan that I could use, to me that savings.

 

I think there's three different ways that that could be done. There is a large co-op in the area that is considering doing this as the service to the patrons and that would bring in a large administrative capability to run the premium collection and the paper work through the enrollments and such through that business.  So that's one option.  Businesses that were interested in doing that my understanding is they could add a one to two percentage of premium to pay for those costs.  And that would still be less expensive than setting up an entirely new business organization to run this. Which would be very expensive.  A second option is to work with the insurance broker and ask them to do it as part of their services.  They would be the premium collection point, they would be the enrollment point, they would do that administrative function for a certain percentage of premium.  The third option, which people really weren't interested in was to have the insurance company do it.  Have them be the insurance expert, the collector of the premiums, the enrollment and the insurer.  And people really didn't want that.  They kind of wanted a check and balance system. Especially the first few years while they saw how it was going to work.  But they could set up their own, a group could set up their own enrollment and oversight but I just think that that would just add allot of cost that you might not want to do.

 

As they begin, the law states that they have to have a comprehensive plan. But as that group is successful and they're able to manage their product, they can add on.  And I'm assuming that anything, whether it's vision, pharmacy, long-term care, any of those types of policies could be added on to the plan that the business starts out with, and gain some business successes.

 

 

 

Does everyones rates have to go up if for example if there is a large expense?

 

[[MOST QUESTIONS ON TAPE AT THE END ARE INAUDIBLE]]

 

Answer:  How that's usually handled is through a reinsurance mechanism.  The group will work with the insurance company, the group supports the payment on the claims, up to ten thousand dollars.  And than they buy a reinsurance mechanism.  The group pays for the costs up to that level.  The numbers of the group will determine how high or low that level is.  My assumption is the bigger the group the higher it would be, and then that reinsurance would kick in.

 

Answer:  John Closerman and David City has worked several years putting together an insurance type group product in the David City area.  And when we met with him they negotiated, I mean it took them almost two years to bring on their insurance expert.  We were able to get our information together, Department of Insurance and do our legal work, and be ready to ask for a bid within weeks.  Because of what we learned from John and the David City Group.  And I can't tell you how much I appreciate that.  But what they did, when they went to go negotiate with their insurance expert, the insurance expert wanted a ten year contract and 5% of premium.  And they were able to negotiate that down to a two year contract with 2% premium.  So there' allot of negotiation power, and again, the numbers, how big your group is will help you bring that on board.  One of the things that we wanted to achieve was a significant size in both areas, so the group had that size advantage as they started working with the insurance negotiations.  If they'd been a group of five I don't think they could have negotiated very strongly, but by working with the local level and bringing in at your second meeting over 200 people.  That did two things for us, first of all, it's going to give you strength of negotiations.  It's a big enough block of people their not going to watch away and say we're not going to bid.  When we first started, I had allot of upset insurance people call me.  And now they call me and want to know how they can participate in a bid.  So, there is a market response, and that's how change happens, we've got some good tools in Nebraska.  It's not over yet, we still don't have plans for those groups.  But I'm confident we will.

 

Answer:  We're at the point where we're bringing on the insurance expert. And that expert will help us define what in their best interest. Because that guy that women whoever they are, they work for that group. If the group is not happy for what they do, they will not work for the group.  Like in the Carney area especially, out West we have two people per square mile. I don't think managed care is going to be a big part of the Western Nebraska plan. Carney has a fairly dense population base, I'm guessing they will have several of their people join a managed care product.  And than the people from the communities surrounding will probably join some type indemnity plan, however going in as group they will have the full number advantage.  But they might have three different sign up options.

 

Answer:  I think that what we're going to see happen is the same type of thing we see business do.  And businesses that have big group plans.  They have those healthful living classes because it pays their premiums to bring them down with those healthy living. Now there are five factors that insurance uses to base their cost on, one is geography, whatever your zip code is they have a factor for how high those costs are, one is gender, one is age, one is smoking, and one is pre-existing conditions.  So those five factors are blended to find a premium cost.

 

Answer:  The insurance told me that if you had a group of 50 people they would not be individually underwritten. However, in my thinking I would rather have better information about my group and more predictable premiums than coming in with a very low premium and allot of hidden preexisting conditions that than raise rates 200-300% the first three years, because that group will probably not be successful as the rates go up, people are going to dive off.

 

Answer:  Because we're working from the state level to facilitate them and again, we don't vote in these groups, we're simply there are as facilitator and to act as an information source and help connect them with resources they need.  What we're using the state grant for, is first of all to hire the interns in the community, second of all we covered the cost of the media, and as we found out that really wasn't good spendature of dollars.  Cost of mailings, right now we're doing the mailings through the Department of Agriculture, cost of copies, those administrative type things, and what we've done than is by using this state grant with these nine major partners is we've removed those costs from the premium.  So these first two groups when they come into it, they don't lay a penny on the table until they sign for the coverage and than they pay their premium.  In groups that aren't working with that state project, than they'll have to pay that startup cost.

 

Answer:  The third party administrator, the best way to handle that, nobody pays them anything until their is a premium.  Because that brings them into the business deal.  They have to be sure your happy, they have to be sure and your happy, they've gotta be sure to collect that percentage of premium for year two, year three. You've all gotta be happy and they work for the board.  If you pay them that fee you don't have that check and balance. So working a premium for that third party administator, insurance expert, I think really brings accountability to the structure.  And that was insurance recommendation on how to handle it and I think that that's probably the way that both groups will go.

 

Answer:  If you would call me, I've had from two other areas of the state, and I just tell them pull a group together and we'll talk. But they've never called me back, so I don't know what this means. There have been allot of people from the Norfolk area and they call us up and said we want to start a group up here how do we do it.  So there is a need in other parts of the state as well.  And there is one in the state of Nebraska, and three of them didn't work. An insurance agent when the law passed he set up three county wide insurance purchasing groups, but my understanding was there wasn't a business structure or a business plan or any management of those groups.  It was just like, here it is, and than as people enrolled, there wasn't on going activities to keep enrollment.  Cause the fastest way to kill one of these things is stop enrollment.  And the insurance company did cap it.  So there were allot of problems with that group.  But I think there were allot of different reasons why it didn't work.  And that's why I say, the key to the success of this thing is local leadership.  And the worst thing that could happen is lack of committment to the local leadership.  And if you dropped your insurance coverage and needed this plan and our local leadership didn't do diligent.  Your going to have some people who really end up in a worse situation.

 

Answer:  What's happening out there, I mean to me it's frightening.  I think as these models they become successful, they truly are an alternative to the individual market and if what Jane Bryan Quinn says is true and the individual market is so broken it can't be fixed.  The market will change as people move into those small groups.  I think that's a key part, right there and that is change. And there's a story I'd like to use, just as part of this change, as a college student I've had to do some cooking on my own, not by choice but because I've had to learn by demand because actually I need the food. And so, one day I decided to cook a pork roast.  And I called up mom, I said mom, I just bought this at the store and I how do you actually cook it.  And she said, well the first thing you want to do is cut off both ends of the pork roast and than she started telling me some other things.  I said, wait a second, why do cut off both ends of a pork roast.  Well, I don't know it's because my mom always did it, you have to call grandma for that.  So, I got the phone with mom and called up grandma, and said, grandma I'm fixing this pork roast, and I'm supposed to cut off both ends of the pork roast. Why?  Why can't I just leave them on. And she said, well I don't know you'll have to call my mom for that.  So I called her at the nursing home and I said grandma, I'm fixing this pork roast out here at college, and my mom said to cut off both ends of the roast, I asked why to do that and she said I don't know ask grandma, and she didn't know and I asked her and she said to ask you. Well, the only reason I did that was because my pan was too small. And so, the moral of the story is that change is always constant, and I think that key part of this project, is actually adapting to this change and adapting to this need.  I would like to give some statistic, the reason insurance premiums are so high is that only 3 out of 10 people are insured, so those three people the bill for all ten. That's the fundamental cause of the problem. The second reason, when I first started working on the project five years I talked to Leiutenant Governor Rowback, and I went through my liteny of why this was a problem, the facts, I had my facts together, and she said Sid I understand the problem but why are you the only one complaining.  And than I realized fundamentally and statistically again, 3 out of 10 people here are sick and those are the only three people that know what type of plan they have.  The plans are just enough difference you can't compare, you can't compare coverage, you can't compare costs.  My husband and I, I'm in Western Cherry County, ten o'clock at night, insurance salesman from Sioux Falls, South Dakota calls and wants to come out and sell us a policy.  And I say sir, it's 10 o'clock at night, it'll take you forty minutes to come out here from town, he says, that's OK we're just working the area I just want to get home.  I know that there's allot of those policies out there. I really do believe that by working with groups we not only can improve our own buying power, I think we can improve our coverage and start ferreting out some of those weak groups that don't have good coverage.  And fundamentally if you have three or four good groups going in this state why can't they bid it together. 

 

 

Answer:  When I started working, I went in my own backyard first, as you all know, reform in your own backyard is a pretty dangerous place to be.  And I didn't want the independent insurance agents in my town not knowing what I was doing.  So I met with each one individually, I sat down with them, I told them what I was doing and I told them what I was not doing which was selling plans, and I told them why, and I thought they would be adverserial.  What I found however, is they were not, they were supportive.  And the reason is when people in rural communities go to buy insurance, they want health, they want crop, they want life, they want property, they want auto insurance, and if they can't make the bid on the health, they might loose their whole book of business. So by having these going and functioning they could at least refer those people to an attractive option. And hold onto the rest of their business.  I think the most dramatic meeting we had was out in Kimble, and their's an insurance guy that came to our meeting. And whenever, I knew he sold insurance, he was a strong community leader, so as I went through my presentation, you know I crossed referenced everything with him, and when we were all done, everybody looked at him, I said OK Dial, what do you think and he said, I love this, it shouldn't just be Kimble, it better be the whole county or bigger, and he said I have to tell you I regret every individual policy I've ever sold.  Because the market is unstable, as those premiums get jacked up really high. Who do they get mad at. You know those people come back to him. 

 

Thank you.  Thank you very much for coming today. Don't hesitate to stay and ask more if you'd like.