According to the British Telegraph, Michael Jackson’s promoters are having a tough time finding an insurance underwriter for his latest concert tour. Why would a performer as popular as Michael Jackson have trouble getting insurance?

When promoters put on a concert tour, they usually buy a product called cancellation insurance. That is because they have to make a substantial investment before they ever open up one show. They need to sell tickets, advertise, and make many other arrangements. If the performers should have to cancel a show, or a series of shows, they could lose a lot of money.

However, as successful as a tour by the King of Pop, Michael Jackson, will probably be, few insurers are willing to underwrite the tour. This is despite that face that Mr. Jackson has demonstrated his good health and healthy lifestyle. But the famous singer has been embroiled in lots of controversy lately, and that may make underwriters consider him a high risk.

If you were planning on seeing Michel Jackson live, do not be disappointed yet. The show promoters promise that they will self-insure the performer’s concert tour if they have to.

What Does Out Of Network Mean?

PPO and HMO health insurance plans use a network of medical service providers. These providers agree to abide by network rules, and of course, network price guidelines. So these providers, like doctors, hospitals, and therapists, agree to accept network charges for various medical services. In return, they may get more business from the many insured people who belong to that network health insurance plan. Most of the time, insured people get a book or website where they can look up network providers.

HMO plans usually clearly state that they will not cover medical services by providers who are not in the network (i.e. Out of network providers). Of course, HMO plans will usually authorize out of network charges in the case of an emergency.

PPO plans are different. They usually provide more coverage for services provided by network providers. But a big part of their attraction is the fact that they advertise flexibility. They will cover a larger percentage of the bill when network providers are used. But they also state, in the policy, they will cover non-network providers, but at a lower rate.

These are some examples of a (fictional) PPO Policy:

• Network Doctor’s Office Visits: $30 Copay
• Non-Network Doctor’s Office Visits – Covered at 70%
• Network Emergency Room: $100 Copay After $300 Yearly Deductible
• Non Network Emergency Room: Covers 70% After $300 Deductible

So a network doctor would cost a simple $30 copay. If a doctor’s office visit costs $150 in a certain area, a consumer would have to pay $45. That doesn’t so bad because a covered person has the option to pay a little more to choose any provider, or pay a little less to use a network doctor. But is this how it really works out?

Let’s look at the second case. In theory, a person who has not spent any money towards their deductible, would pay about $400 for a $2,500 visit to a network emergency room. But, in an emergency, who bothers to figure out which emergency room in in their network? The non-network bill should not be that much higher, at about $660. This does not seem so bad, but again, is this how the bill will really be calculated?

Insurers Only Pay Non-Network Costs Based Upon Their Calculations

The problem is that many insurers kept a private database of their estimation of what medical services would cost. These are called usual and customary costs, and insurers kept a database of medical service prices that was based upon a secret formula. Claims that these estimates did not reflect reality made it to court and the US Senate. One US Senator went so far as to call this scheme insurance fraud. But this is insurance fraud of a different kind, one actually committed by an insurance company!

Is Health Insurance Company Pricing Accurate?

One major insurer, in particular, has been accused of setting unrealistic prices for medical service in order to force consumers to pay more of the costs. This insurance company claimed that average medical cost of a doctor’s office visit in NYC was $100. But consumer groups content that $200 would be a more realistic figure. I know that, even in my Texas suburb, a doctor’s office can cost more than $100! Even though I do not claim to have the data, I cannot imagine that New York City would be cheaper.

How Does Pricing Really Work For Covered People?

Look at our examples above. A non-network provider would still cost the copay of $30. For non-network providers, the insurance company would only cover the first $100 at 70%. So the insured person would pay $30 (30% of $100) + $100 (the amount the doctor charged over the amount the insurer said they should charge)! While the insurance company only pays $70, the consumer would be responsible for $130.

When you take our emergency room example, where costs would be much higher, consumers would end up paying lots more. If they underestimate doctor’s office visits by 50%, can we assume that they underestimate all medical services by a similar percentage. Now we are looking at overages of thousands, and not hundreds, of dollars! And we haven’t even looked at actual hospital admission costs where overages could be thousands, or even tens of thousands of dollars.

Major Insurers Agree to Evaluate Health Care Prices

Perhaps understanding that now, when the idea of a US public health insurance plan is gaining momentum, is no time to come under scrutiny for deliberately underestimating costs, some major health insurance companies have agreed to evaluate their pricing systems. They have also agreed to be more transparent about the way they estimate medical service prices.

What Can You Do About Unfair Payments?

If you do not think that your own health insurance claim was settled fairly, you have a right to dispute it. Of course, the size of your complaint will probably determine how far you want to push it.

1. Call your insurer or insurance agent - sometimes miscoding or other errors cause underpayments, and those can be resolved quickly.
2. Call or write your state insurance department -  they exist to protect consumers, and they do look into complaints and inquiries.
3. Speak to a lawyer - many lawyers provide free consultations, and many will also represent you for a percentage of the lawsuit if they accept your case.

Look For A Fair Health Insurance Company

If your health insurance company does not satisfy you, you certainly have a right to shop around. We make it easy to compare health insurance with our fast, safe, and free health insurance quotes.

What is a Life Settlement?

People can sell their life insurance policies to a third party for less than the face value of the policy. The third party hopes to profit by collecting the proceeds when the covered person passes away. Typical sellers are retired people who decide the cash settlement will be more useful now, while they live, than it will be to their heirs when they pass away.

For example, a policy owner could have a million dollar whole life insurance policy. Assume the policy has a cash value of $100,000. A third party may offer half a million dollars to buy the policy.

Of course, that amount is considerably more than the amount the covered person could cash his or her policy into the insurance company for. But it is still less than the third party would collect upon the policy owner’s death. In addition, the purchaser would continue to pay the premiums. If the policy owner can use the money for retirement expenses, and also be relieved of paying a premium every month, this may be a reasonable transaction.

Life Settlement Offer Amounts are Decreasing

Apparently third party purchasers depended upon credit in order to finance life settlements, and as credit got tight, sales declined by 20%. Meanwhile, the S&P 500 stock market index has declined by almost 40%. Many retirees depended upon market investments for income, so now the life settlement market has more sellers than buyers, and buyers are pickier about which policies they will purchase.

In the past, a healthy 65 year old could sell a large policy, even though the purchaser would not expect to collect the death benefit for 15 to 20 years. But morbid as it is to consider, polices from older people with shorter life expectancies will be more profitable for the buyers.

Life expectancies affect the life settlement market as much as the economy does. Many underwriters have increased their life expectancy calculations over the last few years, which means that possible purchasers may be even less likely to offer a settlement to younger retirees.

Should Policy Owners Still Seek Life Settlements?

Life settlements are controversial, but can still benefit some retirees who may be struggling financially. When the economy improves, the market for policies may improve, so if possible, it may be better to wait.

Even though people on all sides of the political spectrum admit that the US health care system cannot serve the needs of many citizens, reform keeps getting stalled. One of the big problems has been getting all of the different players to compromise. Health insurance companies, business management, medical providers, legislators, and of course, consumers, all had their own interests, and nobody could get them to put those interests aside in order to achieve positive change.

Many US Workers Do Not Have Health Insurance Now

We have made some progress. Right now almost all US retirees and 90% of children have coverage. But amazingly, 1 in 5 US workers, the people who pay taxes to support health programs, do not have a health insurance policy. These uncovered people do not have a group medical plan at work, and they cannot afford individual major medical insurance. And this number has grown from about 1 in 7 workers who did not have health insurance in the 1990s.

Will Health Insurance Companies Help?

But private health insurers, that group that was one of the opponents to changes in the health care system, may be showing signs of compromise! Again, their recent flexibility may be a desperate move to keep the government from creating their own public health care system that would compete with private companies.

However, in a startling move, two large insurance groups have recently said that they may be willing to give up the practice of rating applicants by risk. Right now, people with preexisting health conditions must pay a lot more for individual health insurance than very healthy people. In the industry, this is called a “rate up”. Many uninsured Americans have health conditions, so they either cannot afford health insurance, or are simply declined by individual insurers. We assume that any planned government health program would be open to everybody without any risk rating.

Is This Compromise Enough?

This does not help everybody. I do believe that making health insurance more affordable for people with certain health conditions will reduce the problem, but it will not eliminate it. I still have some questions for the insurers and legislators.

Hope For Health Reform Compromise

• Premium Rate-ups apply to people with minor and controllable health conditions. But what about the millions of people who would be declined for health insurance because of more serious health issues?
• Does this lack of risk rating mean that everybody’s premiums will go up even more?
• Will there be government subsidies for people who still cannot afford the premium?
• What about small business owners who often suffer from risk rating of their small health plan groups? Will this practice also be offered to them so more small companies can offer a group health plan?

I am a little more optimistic because the insurers addressed the issue, which means they are thinking and talking about it. But I still do not think that this solves the problem. So the answer leaves me unsatisfied, and I hope next time they are willing to move a little further.