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Monday, September 27, 2010

The Inmates have taken over the Asylum: the 2nd step of health reform

When we last left health reform, one of its most significant early changes was dangling over the cliff. Guaranteed issue or the practice of no longer denying health insurance for children under the age of 19 was scheduled to start on Sept 23rd. Health insurance plans or the inmates in this analogy were expected to change their practices but there was a trouble brewin' on the horizon. The insurance companies pointed out that with this provision, children could drop their insurance whenever they didn't need it and then enroll whenever they needed it. This would be expensive and individual insurance could become even less affordable. The Obama administration was so concerned that they gave the state insurance divisions flexibility to negotiate and offer concessions like a limited period of time when children could enroll or open enrollment period.

How did the state insurance divisions and Obama respond in this crisis when it emerged in early August? Late and ineffectively. If they were super heros, school bus would have toppled over the cliff. If they were Austin Powers, they would have been eaten by sharks with frickin laser beams.

Children were supposed to stop being denied insurance on September 23rd. As that date approached, the two state insurance divisions in my area (Oregon and Washington) had yet to issue any guidance or rules to respond to the insurance companies' concerns. In response, the insurance companies steadily began to announce that they would stop offering insurance to children. First, national carrier Health Net, stopped offering individual insurance to anyone. Other national carriers like Cigna, Assurant, and Aetna pulled out of the child or dependent only market. This means that a parent must both pass the health screening and enroll in the individual insurance plan in order to purchase coverage for their child with these plans. In Oregon, the nail in the coffin was when when Regence, the local Blue Cross plan who sells almost half of the individual insurance plans in the state, announced they were leaving the child only market. When there is market uncertainty, the market seeks certainty. The main result of this health reform provision has been the disappearance of the option for children to purchase insurance without a parent.

There was great hope that reform would stop insurance companies from sinking to the lowest common denominator. It was thought that there would be vigorous and clear enforcement by the regulatory bodies that would convince all insurance companies to participate in guaranteed issue for children under fear of fines, exclusion from future opportunities, or even sharks with frickin laser beams. The biggest fear that insurance companies had is that they would be the only ones participating, receive a disproportionate share of unhealthy children, and be at a competitive disadvantage that they couldn't recover from. This fear was not allayed.

Instead, the Obama administration and Health and Human Services (HHS) did not provide sufficient support and guidance to the state insurance divisions. The state insurance divisions to not have the resources nor bandwidth and were overwhelmed by the issues with this implementation. Insurance companies filled this leadership vaccuum by announcing their own interpretations and intentions for how they would implement guaranteed issue.

The Washington and Oregon insurance divisions finally issued draft guidelines on open enrollment periods and other provisions that would apply on Sept 23rd which was the day that they were supposed to be implemented. Insurance brokers have reported that some insurance carriers like Lifewise, don't intend to comply until Sept 2011 when they have to refile their plans. However, that's actually fairly irrelevant since the insurance division haven't been able to provide guidance and ensure compliance for the insurance companies that have expressed an interest in following the rules.

I had higher expectations for reform then this.

Tuesday, September 14, 2010

Hibernating for the MBA application season

All my faithful readers (Hi Mom, Dad, Halley, and Uncle Danny!), have noticed that my blog posts have slowed from their raging torrent to more of a trickle. That's because MBA applicants have started to work on their applications and it's been a busy start for admissions consultants. Therefore, I've decided to declare some form of hibernation for this blog while I spend the next month or two shredding essays on leadership, teamwork, and other lofty MBA goals, words counts, and the occasional self-esteem of the future MBA class of 2013.

The application environment has shifted as more candidates are using some sort of skilled or professional reviewer. This does not mean that everyone is using admissions consultants or an applicant is at a disadvantage if they do not. I don't use anxiety to sell. What it does mean is the days of sending your essays to your parents to review for a comma adjustment here and there are done. There is enough information on the web and people can access skilled reviewers. As a result, essays are consistently more coherent, tightly written, and better answer the questions.

In order to not leave applicants or readers lost and without any guidance in my blogging hiatus, here are some tips that I can share about the early MBA application season:
  1. Current MBA students typically give bad advice: MBA students are focused on being accepted by employers and have forgotten what they did to be accepted by business schools. Business schools look for different criteria than employers. Employers like to hear business jargon, a detailed explanation of your investment philosophy, or your strategic planning capabilities. MBA programs want to hear about how you will be a contributing member to the class in your essays. Every MBA question is some variation of "Who the f#ck are you and why do we care?" not "Here's a case study. What framework would you use?"
  2. MBA admissions look at work history and academic performance to guess how smart or successful you will be. Therefore, the essays are for describing you as a person. If your hopes, dreams, rises, and falls in your essays all center around leveraging your life mission towards creating organization value that maximizes risk and return, you either have been very focused on an MBA since you were 12 years old or will come across as a complete tool. Or more likely, both.
  3. Achievements move the essay along but are not the primary focus. MBA applicants have generally been very successful compared to their peers. As a result, most of their interviews are more like victory laps where they expect questions like, "Really, tell me what you did next! How did you escalate the project plan to achieve the next milestone?" MBA admissions want to know what that achievement actually meant to your personal development and the emotional connection should be slightly more developed than "Everyone appreciated my contribution." The focus is how the achievement shaped you in to who you are today and not about admiring it like a wedding centerpiece.
  4. No cliches. If your essay ends with something like, "This experience taught me that it was about the journey not the destination," there are a few outcomes all of which are bad. 1) That sentence is true for 99% of the applicant pool and you did nothing to distinguish yourself from the masses. 2) If the reader thinks that's actually a plot twist, then you lost them a long time ago.
  5. You will not get denied due to your recommendations. Actually, that's not completely true. If your recommender answers 50% of the questions with, "So's your face," then you might get denied. Or if you use a generic To Whom it May Concern form or some of those universal recommendation forms that's floating around, you might get denied. Nothing tells a school that based on your careful research, they are clearly your top choice like using a generic form that says, "I'm applying to so many schools, I can't even keep track."
Happy MBA application season everyone.

Saturday, September 11, 2010

Moving Away from a Middle Finger Relationship in Health Reform

During one of the many webinar's on health reform where I was multi-tasking (or looking at youtube videos of water skiing squirrels), there was a presentation on the evolution of the relationship between insurance companies and regulators. The speaker described it as an arm's length relationship that needed to move towards a hand shake or hug for the industry to be more successful. I disagree with this. The relationship is not currently arm's length but rather a middle finger relationship that may involve orifices shortly. The worst part is that the Obama administration has a model in place that could move the insurance industry and regulators to a friendlier position.

Health and Human Services Secretary and prominent middle finger extender, Kathleen Sebelius, fired off a statement last week accusing the insurance industry of blaming health reform for a 1%-9% increase in prices. Sebelius felt the price increase attributed to health reform should only be 2% at the most. The insurance industry pointed out that removing maximums on lifetime benefits, making preventive services like colonoscopies free for everyone, requiring that children under 19 never be denied insurance, and other provisions are not going to make insurance any cheaper and defended their numbers.

Implied was that insurance companies should reduce their profit margins which average 3%. While that is reasonable (and expected given the current viewpoint that the only difference between insurance companies and a horde of pillaging Vikings is that the insurance companies have moderately better personal hygiene), the insurance companies have been losing profit margin with other reform provisions. There are billions in new fees and a requirement that medical expenses be at least 80%-85% of revenues which has taken a few percent off profit margins already. Additionally, the reduction in Medicare Advantage payments will increase the cost that employers and individuals pay for insurance. Medicare Advantage was most of the profit margins for insurance companies the last few years.

Insurance companies are prepare to give the middle finger right back by refusing to participate in the coverage of all children under 19 by not offering individual insurance to any children at all. There has been some movements in that direction and it's increasing in my home state. Individual insurance covers 9% of all Americans and children make up around 1/3 of that group. Therefore, it's a very small line of business and insurance companies are signaling that they may leave it entirely rather than follow the new rules. Individual insurance may stop being sold to any child no matter how sick or how healthy as a result. I was initially surprised at the speed in which insurance companies deployed a nuclear option. However, given the Obama approach towards the industry, it's not like insurance executives were going to be invited to play pick up basketball anytime soon.

The state regulators are in no position to enforce rules as Sebelius has promised they would. In my state, the email around a proposed open enrollment period as a solution to this issue had the subject line, "Please disregard previous email, this is the correct version." If state regulators can't even send the right attachment with a very important email, they are not in a position for this volatile and tricky negotiation.

What makes this situation even more unfortunate is that the Obama administration has a way to avoid all these dueling middle fingers. That way is the much maligned Medicare Advantage program. This is the program that Obama has said doesn't work since it overpays insurance carriers since it pays 15% more than the federal government pays for traditional Medicare.

The private Medicare Advantage program used to be called Medicare + Choice and it paid 5% less than traditional Medicare. Not many insurance companies and only 7% of the seniors participated in it. I listened to a webinar with Tom Scully, former administrator of Medicare, where he explained that they needed to pay insurance plans more for participation. This increased payment did result in 25% of seniors participating and a lot more insurance companies. However, he agreed that 15% more was too much which is why Obama should have cut the payments (despite the impact on employer and individual insurance which I describe above). With the payment cuts, there are quality bonuses that plans can earn for demonstrating good customer service, medical management, and ensuring high quality care. To earn these bonuses, plans have to cover preventive services for free, pay 85% of revenue on medical expenses, and similar requirements as health reform. However, insurance plans are not fighting these provisions because of the Golden Rule. Medicare has all the gold so they make the rules. Insurance plans will be paid more for following these provisions and less if they do not.

This supports a future health insurance model of the government contracting with private insurance plans which is the current Medicare Advantage model. It's the simplest incentive plan in the planet. If the government controlled all payments for health insurance, insurance companies would have to follow the rules. There are no middle fingers given in Medicare Advantage. In fact, Tom Scully's advice for how insurance companies could form a successful relationship with Medicare regulators was:
"Suck up, suck up, and suck up some more. Take a nap, then suck up, suck up, and suck up again. Medicare likes working with good plans and doesn't like working with plans that don't follow the rules."

Wednesday, September 1, 2010

Table Manners at the Executive Table or Keeping your Interview Skills Good Enough to Eat

In a thrilling sequel to my previous post, I offer more complaints about Human Resource recruitment and the thrilling conclusion to my theory around applying for jobs as a networking technique. The sequels are rarely as good as the original but I think the bar for my first post was pretty low. Complaining about Human Resources falls in the same category as complaining about your hold experience with an appliance call center or the customer experience of airport security. No one's story is unique, we only want to share our complaint, have no real interest in listening to others, and these type of blog posts can be completed while someone is sitting on the toilet.

Having set the bar low enough to trip over, I can assure the reader that my post will be slightly more interesting and I will not need toilet paper after I am done typing.

Recruiter complaint: After filling out the recruiter's questionnaire, she wrote back and told me to complete the section for current employees as soon as possible. When I responded that I was no longer a current employee, she wrote that she had realized that mistake after she had sent the email. Her recovery technique was apparently waiting until I pointed out her mistake. I'm glad doctors don't use that same technique of waiting for patients to have an adverse reaction to their medication before correcting their mistake.

However, after my painful experience (that was probably equally painful to read) was done, I was allowed to interview with the division vice president. I did some preparation but there is nothing like a live interview to make you realize the difference between practice and game time. It's almost like the difference between masterbation and actually having a partner. None of the interview questions were unexpected but it made me realize how I needed to adjust future preparation. This insight enforced my belief that applying for jobs as a networking technique is a good idea because of the additional opportunities for live interview practice.

Interview Questions:
Why do you want to leave your current position and come back to work for us? The real reason was because the new job would allow me to work from home and pay based on a state with a higher cost of living. The job itself was in an area that interested me, too and I liked the company which were my actual answers. It was a surprisingly difficult question to answer since I couldn't respond with my true #1 reason. As a result, I probably will not apply to jobs in the future if I can't articulate the real top reason in my interview.

Tell me about a time where you had an ambiguous assignment.
The interviewer was fairly vague with the questions and made them very open ended. She didn't ask me to explain the results, what I did, how I responded but left that up to me. I knew to include these aspects but I did have to take a few moments to gather all my thoughts without the framework in her question. Ultimately, I used my story that I also use to answer the questions about a time that things did not go well or I had failed. As a result, I'll have to remember to develop a separate story for ambiguous assignments because. . .

Tell me about a time when things didn't go well.
Doh! I had to think for a few minutes since I had used my typical failure story. The interviewer also specified that this be a more current story since my ambiguous assignment tale was about my first job after college.

Describer your work style:
I had to wing this one a little bit and as a result, I didn't factor in that she had just told me that her department's culture is about action and getting things done. That should have been my work style too but instead I was a little too honest about the fact that I still act like a former social worker who likes to check in with everyone.

Do you have any questions for me?
Of course I do. Even though I talked with some of my former coworkers about this job, had worked at this company, and looked up your profile on Linked In, I will always have questions. Like, tell me about your background and how you arrived in this position so I know who I am going to work for. Or what will a successful candidate do in this position or what advice would you give to someone who accepted this job. Even ask what are the key challenges in the industry or with this position. It's better to ask a dumb question than no question. I've seen interviewees not ask questions and they look disinterested in the position.

The fact that I had been reviewing MBA admissions essays and offering a lot of critique of the importance of building up the stakes in the story, focusing on what you did, and what you learned helped me structure my answers. However, it did reinforce the fact that we can probably all anticipate the typical questions that we will be asked in an interview and should have a few separate stories prepared. Preparing these stories can give you something to do the next time you're sitting on the toilet without a blog post to write. While we're at it, could someone get me some toilet paper?
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