CA Dept of Insurance: Insurers That Invest in Fossil Fuels on Shaky Ground

Businessman balancing on seesaw in uncertainty concept

Due to market forces, financial analysts expect more coal-fired capacity retirement in 2018 than under the first three years of the previous U.S. Administration. How will this impact California’s insurance industry? Of course, insurers are invested in coal and other fossil fuels and fossil fuel enterprises, says California Insurance Commissioner Dave Jones. This week Jones announced the results of the department’s assessment of the climate-related financial risk in the state’s insurance industry. The department engaged 2° Investing Initiative, an established partner of European financial regulators on the topic, to conduct the analysis for insurers in California’s insurance market with over $100 million in annual premiums. Insurers analyzed have over $500 billion in fossil fuel-related securities, issued by power and energy companies, $10.5 billion of which consists of investments in thermal coal enterprises. The department has published key figures from the forward-looking scenario analysis on its website. The results of the scenario analysis is consistent with Commissioner Jones’ Climate Risk Carbon Initiative determination that thermal coal is shaky financial ground for investors, despite any short-term fluctuations in market price and policy signals.

HEALTHCARE

Will Cuts Affect CHIP?
Kaiser Health News reports that President Donald Trump wants to employ a rarely used budget maneuver called “rescission” to eliminate $15 billion in federal spending, including $7 billion from CHIP, the health program that covers 9 million children from low-income families that earn too much to qualify for Medicaid. The White House says the administration strongly supports CHIP, but most health and insurance advocates remain wary. Read more on KHN.

PRESCRIPTION DRUGS

Blue Shield of California Doing Its Part to Tackle Opioid Abuse
Blue Shield of California announced year-end 2017 results regarding its initiative to curb consumption of opioids among members with noncancer pain. The nonprofit health plan says prescriptions have fallen by 42 percent since launching its Narcotic Safety Initiative in 2015 to help solve the public health epidemic. Blue Shield’s initiative is on track to meet its goal of reducing inappropriate prescribing and overuse of opioid narcotic medication use among its health plan participants by 50 percent by the end of 2018. Since 2015, the average daily dose prescribed for chronic users also fell by 18 percent.

A Pharmacist Weighs in on PBM
On EBN, pharmacist Michael Zucarelli, a national pharmacy practice leader at CBIZ, shares his insights from both sides of the pharmacy counter. Zucarelli answers some pharmacy benefit questions for clients sponsoring self-funded group health plans, including this one:

EBN: The current financial structure of most self-funded group health plans is built upon contractual rebates flowing back directly to the plan sponsor, with these rebates reducing the overall cost of the health plan and the resulting employee premium cost-sharing. Meanwhile, certain insurers and TPAs are now considering sharing rebates directly with individual plan participants. Do you see this trend becoming mainstream?

Zucarelli: Unfortunately, I do see it catching on as a means of quelling the voices of patients who are furious at their rising drug costs. In reality, the finances are much more complex. Consider the fact that most plan sponsors pick up 85 to 90% of the pharmacy cost in aggregate. Additionally, consider that only about 30 to 50% of a plan sponsor’s population actually uses the pharmacy benefit. Then, of those resulting prescription drug claims, only about 10 to 15% are brand name products (e.g., have rebates). The plan sponsor will undoubtedly need to increase premiums to make up for the rebate loss.

Zucarelli also weighs in on the whole Optum-UHC, CIGNA-Express Scripts and CVS- Aetna thing. You know, that little ol’ thing that’s going on.

Commonwealth Explores Prescription Drug Solutions
The Commonwealth Fund has also been busy exploring issues related to prescription drug prices. They’ve analyzed the FDA’s announced plans and actions as of March 31, 2018, and compared them to a comprehensive list of potential actions that could improve price competition among drug manufacturers included in their 2017 report, Getting to the Root of High Prescription Drug Prices: Drivers and Potential Solutions.  What did they find? “The FDA’s plan includes actions that could indirectly lower prescription drug prices through increased competition. The agency has made progress in implementing its proposed changes but has not fully executed them. The FDA could use its broad authority over the approval of drug products to take additional actions that improve market competition. Congress also could take action to support the FDA’s efforts in increasing competition and addressing anticompetitive behaviors.” Read all about it here.

VOLUNTARY BENEFITS

Cigna Improves Claims Filing for Voluntary Benefits Policies
Cigna announced that customers who submit an eligible medical claim will now also receive a reminder to file for benefits under applicable critical illness, hospital care, or accidental injury voluntary insurance policies. The claims process, called Cigna Simple File® Auto Compare , already reminds customers of their other voluntary benefits when a qualifying life insurance, AD&D or long-term disability claim is received and has been enhanced to now include medical claims for triggering proactive outreach. Visit Cigna online for more info.

LTC

Few Long-Term Care Insurance Claims Begin in Nursing Homes
The vast majority of long-term care insurance claims begin in the home according to an industry analysis of claims conducted by the American Association for Long-Term Care Insurance (AALTCI). According to AALTCI, 52.1 percent of all new long-term care insurance claims in 2017 began in the home setting.  The organization analyzed data from six leading long-term care insurance companies. The nation’s long-term care insurance companies paid $9.2 billion in claim benefits in 2017 to some 295,000 individuals according to AALTCI.    Women accounted for over two thirds (68 percent) of newly opened claims in 2017. The study found that 19 percent of new claims by women started in a nursing home setting while 34 percent began at home.

EMPLOYEE BENEFITS

DOL Issues Opinion Letters
Hey, employee benefits folks, want some interesting reading? You’re in luck: The Department of Labor is reviving its practice of issuing opinion letters at the request of employers. Leonard Feigel of Foley &Lardner parses two such letters in this blog post.

CAL BROKER

CryptoWatch Preview: CIO Calls for Greater Diversity in FinTech and Blockchain
Bloomberg Technology recently reported that the $460 billion digital currency world is starting to open to women, noting that four of the 30 largest initial coin offerings last year had female co-founders, including two of the biggest ICOs: Tezos, at $232 million, and Bancor, at $150 million. Yet the 2018 North American Bitcoin Conference (NABC) in January sparked harsh criticism for its lack of diversity and inclusiveness—among 80 speakers, there were just three women; and the conference’s only official networking event was held at a strip club. Monica Eaton-Cardone, a financial technology (FinTech) executive specializing in risk management and fraud prevention, believes women can play a major role in advancing cryptocurrency and blockchain technologies—and warns that excluding them could hinder industry growth. A report by Ernst & Young revealed that women have tremendous spending power—their global incomes were projected to rise from $13 trillion as of 2013 to an estimated $18 trillion this year. Read more of Eaton-Cardone’s insights in the upcoming June issue of Cal Broker!

The May Issue is Up!
California Broker’s May magazine is now online at calbrokermag.com. Don’t miss: Corey Van Houten writing about meeting compliance in the era of repeal and replace, Jessica Word  and Mike Albert on technology, Susan Hatch,  Bill Kiray and Holly Ackman on Medicare, William Upson on LTC  and much, much more.

PEOPLE
Kaelin Receives LAAHU Paladin Award
The Los Angeles Association of Health Underwriters honored Bobbi Kaelin, vice president of Riverside-based PayPro Administrators and current president of LAAHU, with the Paladin Award, LAAHU’s most prestigious award. The Paladin is awarded to the member of the year for leadership. Kaelin received the award at LAAHU’s annual sales conference at Los Angeles Convention Center April 12.

EVENTS

EBPA & LAAHU Social Event
May 10th, Blue Cow Kitchen + Bar, 350 S Grand Ave
Los Angeles, 4pm – 7pm
Get to know members of both the Employee Benefit Planning Association and Los Angeles Association of Health Underwriters. Members and guests welcome. Two drinks and appetizers included with each registration. Register here.

LAAHU May Meeting- Long-Term Care
May 17, 8am, Sportsmen’s Lodge, 12825 Ventura Blvd, Studio City
Topic is marketplace changes in long term care with presenter Steve Cain, director of LTCI Partners. There will also be an election of directors. Nominations can be made from the floor at the meeting. Click here for names of those already nominated.

IICF Casino Night
May 17, The Rotunda, San Francisco
Join the Insurance Industry Charitable Foundation for a fun night of gambling and insurance industry networking while also raising money for community grants. The event takes place at The Rotunda, Union Square, San Francisco. Registration and sponsorship info available here.

CAHU Capitol Summit
May 21-23, Sheraton Grand, Sacramento
Speakers will address issues such as universal coverage, upcoming state and federal bills, and the current “lay of the land” in Sacramento and Washington, D.C.  In addition to insight and information, the Summit also has opportunities for fun and networking. Keynote speaker is radio show host Joe Getty. Register and info available here.

NAFA Annuity Leadership Forum & Hill Walk
June 13-15, Grand Hyatt, Washington, DC
Events provide an opportunity for membership to network with one another, advocate on behalf of fixed annuities and learn about ways to enhance distribution. Keynote speaker is journalist Fred Barnes. Info and registration here.

IICF Western Regional Forum
June 21, The Millennium Biltmore, Downtown Los Angeles
The one-day regional format provides opportunities for greater participation and networking with colleagues here in the West and beyond. There will be ample time for networking with speakers as well. Topic this year is Driving Diversity: Cultivating Individual and Industry Confidence. Learn more at womensconference.iicf.org

NAILBA 37
November 1-3, Gaylord Palms Resort and Convention Center, Orlando, Florida
Detailed information about NAILBA 37 will be available soon. Exhibit hall and sponsorship opportunities available here.  Or contact etoups@nailba.org for more info.