Governor wants $30 million to jump-start insurance for all

Gov. Jon Huntsman Jr. wants to make a $30 million "down payment" on a comprehensive, three-year proposal that would require all Utahns to be insured.
That money, which would expand eligibility for Medicaid and the Children's Health Insurance Plan (CHIP), is a significant first step toward implementing sweeping health-system reform in the state, Huntsman said.
"The way we go about handling health care is economically unsustainable," he said Monday, pointing out that health care costs in Utah grew at more than double the rate of inflation last year. Fewer than 60 percent of businesses now offer health insurance to their employees.
His plan, a confidential working draft of which was provided to The Salt Lake Tribune last week, "is about costs, and it's about quality and it's about access," he said.
But Huntsman, who deflected reporters' questions about the details of his plan at a news conference, said a blueprint won't be rolled out until the Legislature's caucuses can review it - which could be a few weeks away.
"This is an effort that is driven by the Legislature, by our office, by the business community and certainly by many advocates as well," he said. "So this is an all hands on deck effort and one we're taking very, very seriously."
The health system reform, according to the draft, would aim to cover the poor by boosting enrollment in state plans such as Medicaid, CHIP and Utah's Premium Partnership for Health [UPP], coverage for which nearly half of the state's 360,000 uninsured residents qualify.
The $30 million, included in the governor's budget recommendations for fiscal year 2009, would expand eligibility for Medicaid to those earning up to 200 percent of the federal poverty guidelines, up from 133 percent. For CHIP, children in families earning up to 250 percent would qualify, up from 200 percent, Huntsman said.
The next part of the plan would include devising a way to subsidize working families who don't qualify for these programs and can't afford private insurance; and creating consequences that force those who can afford health insurance to buy it.
One possibility, for instance, is to require Utahns to have a basic level of health insurance before they could apply for a job or register for higher education, according to the working draft.
The idea, said David Sundwall, director of the Utah Department of Health, is that if every Utahn were insured, health care costs would be contained.
"If everyone is covered there is not that opportunity for cost shifting," said Sundwall, who is involved in the health reform effort. "The sad thing is now we have people with no health insurance - but with very high health care costs - and they're what make the costs go up."
In a state such as Utah, he added, "the private insurance-based approach is the way to go right now."
While making individuals responsible for their health insurance will require a new mind-set for the state, Huntsman said, "it will have to be part of what we do." Over time, Utahns will "come to the logical end point that while it is burdensome at first glance, it's economically an imperative for our society."
Funds to create a statewide database to report health care costs and outcomes are included in his 2009 budget, as well as money to develop technology for health care providers to share such information.
"We've got to engage," Huntsman said, "and we're beginning that process."

Missing the premium payment date

Opting for the right insurance cover is like taking your first step towards financial planning. But if you want to keep this security cover intact then you need to be financially disciplined and make those timely payments towards the premium amount. Many times because of sheer negligence or unforeseen circumstances, you miss upon making the payments on time. And when you find those bills, reminders stacked in one corner of the house, you are not sure whether to make a call to the company and revive your policy or simply let it go. Well, if you have been deliberating the same, here is a lowdown on how you can revive your policy.

The Process

There is a misconception that once you miss your due date for paying premium, the insurance company cancels the policy. It is advisable that before you decide to forego your policy, you should check out with your agent or the insurance company what’s the status of your policy. All insurance companies give a grace period of 30 days after the due date.

Nonetheless, even then if you are not able to utilise this grace period, it doesn’t mean that it’s all over. “You can revive the policy till six months from the due date (including grace period) is over. You will be required to pay interest on outstanding premium amount as penalty. The interest, in our case, is 10.33% per annum or higher depending upon the policy that you hold and this vary from company to company and policy to policy,” says Kalpana Sampat, chief – underwriting, claims & group operations, ICICI Prudential Life Insurance. Any policy can be revived during the life time of the life assured, but before the date of expiry of policy term. You need to submit proof of continued insurability to the satisfaction of the insurance company and make the requisite payments of all the arrears of premium together with interest to revive your policy.

Old V/S New

If you believe that reviving the old policy is not a good idea, then you are wrong. Financial planners believe that under no circumstances, you should discontinue the old policy and apply for a newer one. A person who defaults on a policy payment is generally in financial lurch. You need to take into consideration age factor, since you bought your old policy at a young age so the benefits acrrued till date will go away if you take a new policy. Same is the case with ULIPs where the commission charges are higher in the first few years and lesser amount is invested.

However, Manoj Agarwal, head – insurance advisory, SKP Moneywise believes that this theory doesn’t holds true if the policy has been in a state of lapse for over five years, reviving may not be the best option. “If a policyholder wants to revive a policy after five years, we suggest that he take up a new policy, since the fine on premium may be very high by that time,” he says

Insurance Wise Buys and Rip-Offs!

A quirky law known as Barth's Distinction goes as follows: There are two types of people: those who divide people into two types, and those who don't. For the record, I'm one of those people who separate the public into two groups.

For example, here are two types of people: those who buy insurance, and those who don't. Then again, it's perfectly understandable why some people choose to avoid insurance. After all, as I warned in How To Win Insurance Claims, getting a payout from some firms can be like squeezing blood from the proverbial stone.

Nevertheless, we should not tar all insurance policies with the same brush, as there is a huge variation in the peace of mind and value for money on offer. So, without further ado, here are five types of insurance which I've put to the test. For each policy, I've provided three ratings (each on a scale of one to ten) and an overall mark, as follows:

• Likelihood of making a claim. In other words, what are the chances that you will need to ask for a payout? I've included an average figure, but you may wish to adjust this to reflect your own personal circumstances.

• Impact of any loss. What will the impact of this unforeseen event be? The answer could range from the trivial to the catastrophic. For example, having your bicycle pinched is fairly trivial, but dying and leaving your partner without enough money to pay the mortgage could be catastrophic.

• Value for money. Taking various financial factors into account, such as payout ratios and profit margins, how competitively priced is this cover?

I should point out that this isn't an entirely scientific test, but it is backed by my two decades of experience in the insurance industry. Anyway, let's start with one of the most widely held insurance policies in the UK...

1. Car insurance = Must Buy

It's a legal requirement to have a minimal level of car insurance, which explains why we Brits spend over £10 billion a year on this cover. The market for car insurance is fiercely competitive, with hundreds of providers, which makes it easier to shop around for lower premiums.

Likelihood of making a claim: 9/10 (very few drivers go through life without making one or more claims)

Impact of any loss: 7/10 (although, of course, claims range from petty thefts and vandalism to total write-offs and road deaths, so the impact can differ widely)

Value for money: 9/10 (but only 4/10 if you always renew with the same insurer!)

Further reading: Get 60% Off Your Car Insurance

2. Extended warranties = Don't Buy

As I warned in this article, you should be careful when Christmas shopping and, indeed, at all other times of the year. That's because eager salespeople will be queuing up to flog you rip-off extended warranties. My advice would be to reject these every time and, instead, rely on the manufacturer's guarantee and your wide-ranging rights under the Sale of Goods Act.

Likelihood of making a claim: 3/10 (most modern appliances are fairly reliable)

Impact of any loss: 2/10 (we can get by without almost all of our consumer durables)

Value for money: 1/10 (that's a Worst Buy rating, of course)

Further reading: When Electrical Goods Go Wrong

3. Home insurance/buildings and contents = Wise Buy

If you own your own home, then I believe that it's essential to have buildings insurance. Otherwise, a flood or fire could destroy your greatest asset. As for contents insurance, it all depends on how much you have to lose. I know one Fool writer who (like a quarter of UK households) doesn't have contents insurance, purely because his family possessions are fairly modest. Still, a low-cost home insurance policy provides solid peace of mind and, at the very least, catastrophe cover.

Likelihood of making a claim: 6/10 (events range from accidental damage and burglary, to fire, flood and storm damage)

Impact of any loss: 6/10 (but fire or flooding could be particularly disastrous)

Value for money: 8/10 (but only if you shop around)

Further reading: How To Buy Home Insurance

4. Life insurance = Wise Buy

If no-one would suffer financially as a result of your death, then you don't need any life insurance whatsoever. On the other hand, if you have a partner and/or dependent children, then your demise could have serious fiscal consequences. The good news is that life insurance premiums have tumbled over the past decade, making this protection more attractive than it's ever been.

Likelihood of making a claim: 1/10 (few of us die before reaching retirement age)

Impact of any loss: 10/10 (assuming that you have a family when you kick the bucket)

Value for money: 9/10 (nowadays, this market is intensely competitive)

Further reading: Top Tips For Buying Life Insurance

5. Payment protection insurance (PPI) = Don't Buy

Of all the insurance policies which I've come across in the past twenty years, payment protection insurance takes the wooden spoon for being the worst. This protection against accident, sickness and unemployment is hugely overpriced, widely mis-sold and difficult to claim against. Yuk!

Likelihood of making a claim: 8/10 (accidents, illnesses and being out of work are common occurrences)

Impact of any loss: 3/10 (assuming that your claim is typical and therefore lasts for under six months)

Value for money: 1/10 (the worst-value insurance imaginable!)

Further reading: Avoid This Enormous Rip-Off

I'm not quite finished with this topic yet, so watch this space for a follow-up article analysing other popular forms of insurance. Be lucky!