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Health Insurers Are Vacuuming Up Details About You — And It Could Raise Your Rates

[Editor's note: today's guest post, by reporters at ProPublica, explores privacy and data collection issues within the healthcare industry. It is reprinted with permission.]

By Marshall Allen, ProPublica

To an outsider, the fancy booths at last month’s health insurance industry gathering in San Diego aren’t very compelling. A handful of companies pitching “lifestyle” data and salespeople touting jargony phrases like “social determinants of health.”

But dig deeper and the implications of what they’re selling might give many patients pause: A future in which everything you do — the things you buy, the food you eat, the time you spend watching TV — may help determine how much you pay for health insurance.

With little public scrutiny, the health insurance industry has joined forces with data brokers to vacuum up personal details about hundreds of millions of Americans, including, odds are, many readers of this story. The companies are tracking your race, education level, TV habits, marital status, net worth. They’re collecting what you post on social media, whether you’re behind on your bills, what you order online. Then they feed this information into complicated computer algorithms that spit out predictions about how much your health care could cost them.

Are you a woman who recently changed your name? You could be newly married and have a pricey pregnancy pending. Or maybe you’re stressed and anxious from a recent divorce. That, too, the computer models predict, may run up your medical bills.

Are you a woman who’s purchased plus-size clothing? You’re considered at risk of depression. Mental health care can be expensive.

Low-income and a minority? That means, the data brokers say, you are more likely to live in a dilapidated and dangerous neighborhood, increasing your health risks.

“We sit on oceans of data,” said Eric McCulley, director of strategic solutions for LexisNexis Risk Solutions, during a conversation at the data firm’s booth. And he isn’t apologetic about using it. “The fact is, our data is in the public domain,” he said. “We didn’t put it out there.”

Insurers contend they use the information to spot health issues in their clients — and flag them so they get services they need. And companies like LexisNexis say the data shouldn’t be used to set prices. But as a research scientist from one company told me: “I can’t say it hasn’t happened.”

At a time when every week brings a new privacy scandal and worries abound about the misuse of personal information, patient advocates and privacy scholars say the insurance industry’s data gathering runs counter to its touted, and federally required, allegiance to patients’ medical privacy. The Health Insurance Portability and Accountability Act, or HIPAA, only protects medical information.

“We have a health privacy machine that’s in crisis,” said Frank Pasquale, a professor at the University of Maryland Carey School of Law who specializes in issues related to machine learning and algorithms. “We have a law that only covers one source of health information. They are rapidly developing another source.”

Patient advocates warn that using unverified, error-prone “lifestyle” data to make medical assumptions could lead insurers to improperly price plans — for instance raising rates based on false information — or discriminate against anyone tagged as high cost. And, they say, the use of the data raises thorny questions that should be debated publicly, such as: Should a person’s rates be raised because algorithms say they are more likely to run up medical bills? Such questions would be moot in Europe, where a strict law took effect in May that bans trading in personal data.

This year, ProPublica and NPR are investigating the various tactics the health insurance industry uses to maximize its profits. Understanding these strategies is important because patients — through taxes, cash payments and insurance premiums — are the ones funding the entire health care system. Yet the industry’s bewildering web of strategies and inside deals often have little to do with patients’ needs. As the series’ first story showed, contrary to popular belief, lower bills aren’t health insurers’ top priority.

Inside the San Diego Convention Center last month, there were few qualms about the way insurance companies were mining Americans’ lives for information — or what they planned to do with the data.

The sprawling convention center was a balmy draw for one of America’s Health Insurance Plans’ marquee gatherings. Insurance executives and managers wandered through the exhibit hall, sampling chocolate-covered strawberries, champagne and other delectables designed to encourage deal-making.

Up front, the prime real estate belonged to the big guns in health data: The booths of Optum, IBM Watson Health and LexisNexis stretched toward the ceiling, with flat screen monitors and some comfy seating. (NPR collaborates with IBM Watson Health on national polls about consumer health topics.)

To understand the scope of what they were offering, consider Optum. The company, owned by the massive UnitedHealth Group, has collected the medical diagnoses, tests, prescriptions, costs and socioeconomic data of 150 million Americans going back to 1993, according to its marketing materials. (UnitedHealth Group provides financial support to NPR.) The company says it uses the information to link patients’ medical outcomes and costs to details like their level of education, net worth, family structure and race. An Optum spokesman said the socioeconomic data is de-identified and is not used for pricing health plans.

Optum’s marketing materials also boast that it now has access to even more. In 2016, the company filed a patent application to gather what people share on platforms like Facebook and Twitter, and link this material to the person’s clinical and payment information. A company spokesman said in an email that the patent application never went anywhere. But the company’s current marketing materials say it combines claims and clinical information with social media interactions.

I had a lot of questions about this and first reached out to Optum in May, but the company didn’t connect me with any of its experts as promised. At the conference, Optum salespeople said they weren’t allowed to talk to me about how the company uses this information.

It isn’t hard to understand the appeal of all this data to insurers. Merging information from data brokers with people’s clinical and payment records is a no-brainer if you overlook potential patient concerns. Electronic medical records now make it easy for insurers to analyze massive amounts of information and combine it with the personal details scooped up by data brokers.

It also makes sense given the shifts in how providers are getting paid. Doctors and hospitals have typically been paid based on the quantity of care they provide. But the industry is moving toward paying them in lump sums for caring for a patient, or for an event, like a knee surgery. In those cases, the medical providers can profit more when patients stay healthy. More money at stake means more interest in the social factors that might affect a patient’s health.

Some insurance companies are already using socioeconomic data to help patients get appropriate care, such as programs to help patients with chronic diseases stay healthy. Studies show social and economic aspects of people’s lives play an important role in their health. Knowing these personal details can help them identify those who may need help paying for medication or help getting to the doctor.

But patient advocates are skeptical health insurers have altruistic designs on people’s personal information.

The industry has a history of boosting profits by signing up healthy people and finding ways to avoid sick people — called “cherry-picking” and “lemon-dropping,” experts say. Among the classic examples: A company was accused of putting its enrollment office on the third floor of a building without an elevator, so only healthy patients could make the trek to sign up. Another tried to appeal to spry seniors by holding square dances.

The Affordable Care Act prohibits insurers from denying people coverage based on pre-existing health conditions or charging sick people more for individual or small group plans. But experts said patients’ personal information could still be used for marketing, and to assess risks and determine the prices of certain plans. And the Trump administration is promoting short-term health plans, which do allow insurers to deny coverage to sick patients.

Robert Greenwald, faculty director of Harvard Law School’s Center for Health Law and Policy Innovation, said insurance companies still cherry-pick, but now they’re subtler. The center analyzes health insurance plans to see if they discriminate. He said insurers will do things like failing to include enough information about which drugs a plan covers — which pushes sick people who need specific medications elsewhere. Or they may change the things a plan covers, or how much a patient has to pay for a type of care, after a patient has enrolled. Or, Greenwald added, they might exclude or limit certain types of providers from their networks — like those who have skill caring for patients with HIV or hepatitis C.

If there were concerns that personal data might be used to cherry-pick or lemon-drop, they weren’t raised at the conference.

At the IBM Watson Health booth, Kevin Ruane, a senior consulting scientist, told me that the company surveys 80,000 Americans a year to assess lifestyle, attitudes and behaviors that could relate to health care. Participants are asked whether they trust their doctor, have financial problems, go online, or own a Fitbit and similar questions. The responses of hundreds of adjacent households are analyzed together to identify social and economic factors for an area.

Ruane said he has used IBM Watson Health’s socioeconomic analysis to help insurance companies assess a potential market. The ACA increased the value of such assessments, experts say, because companies often don’t know the medical history of people seeking coverage. A region with too many sick people, or with patients who don’t take care of themselves, might not be worth the risk.

Ruane acknowledged that the information his company gathers may not be accurate for every person. “We talk to our clients and tell them to be careful about this,” he said. “Use it as a data insight. But it’s not necessarily a fact.”

In a separate conversation, a salesman from a different company joked about the potential for error. “God forbid you live on the wrong street these days,” he said. “You’re going to get lumped in with a lot of bad things.”

The LexisNexis booth was emblazoned with the slogan “Data. Insight. Action.” The company said it uses 442 non-medical personal attributes to predict a person’s medical costs. Its cache includes more than 78 billion records from more than 10,000 public and proprietary sources, including people’s cellphone numbers, criminal records, bankruptcies, property records, neighborhood safety and more. The information is used to predict patients’ health risks and costs in eight areas, including how often they are likely to visit emergency rooms, their total cost, their pharmacy costs, their motivation to stay healthy and their stress levels.

People who downsize their homes tend to have higher health care costs, the company says. As do those whose parents didn’t finish high school. Patients who own more valuable homes are less likely to land back in the hospital within 30 days of their discharge. The company says it has validated its scores against insurance claims and clinical data. But it won’t share its methods and hasn’t published the work in peer-reviewed journals.

McCulley, LexisNexis’ director of strategic solutions, said predictions made by the algorithms about patients are based on the combination of the personal attributes. He gave a hypothetical example: A high school dropout who had a recent income loss and doesn’t have a relative nearby might have higher than expected health costs.

But couldn’t that same type of person be healthy? I asked.

“Sure,” McCulley said, with no apparent dismay at the possibility that the predictions could be wrong.

McCulley and others at LexisNexis insist the scores are only used to help patients get the care they need and not to determine how much someone would pay for their health insurance. The company cited three different federal laws that restricted them and their clients from using the scores in that way. But privacy experts said none of the laws cited by the company bar the practice. The company backed off the assertions when I pointed that the laws did not seem to apply.

LexisNexis officials also said the company’s contracts expressly prohibit using the analysis to help price insurance plans. They would not provide a contract. But I knew that in at least one instance a company was already testing whether the scores could be used as a pricing tool.

Before the conference, I’d seen a press release announcing that the largest health actuarial firm in the world, Milliman, was now using the LexisNexis scores. I tracked down Marcos Dachary, who works in business development for Milliman. Actuaries calculate health care risks and help set the price of premiums for insurers. I asked Dachary if Milliman was using the LexisNexis scores to price health plans and he said: “There could be an opportunity.”

The scores could allow an insurance company to assess the risks posed by individual patients and make adjustments to protect themselves from losses, he said. For example, he said, the company could raise premiums, or revise contracts with providers.

It’s too early to tell whether the LexisNexis scores will actually be useful for pricing, he said. But he was excited about the possibilities. “One thing about social determinants data — it piques your mind,” he said.

Dachary acknowledged the scores could also be used to discriminate. Others, he said, have raised that concern. As much as there could be positive potential, he said, “there could also be negative potential.”

It’s that negative potential that still bothers data analyst Erin Kaufman, who left the health insurance industry in January. The 35-year-old from Atlanta had earned her doctorate in public health because she wanted to help people, but one day at Aetna, her boss told her to work with a new data set.

To her surprise, the company had obtained personal information from a data broker on millions of Americans. The data contained each person’s habits and hobbies, like whether they owned a gun, and if so, what type, she said. It included whether they had magazine subscriptions, liked to ride bikes or run marathons. It had hundreds of personal details about each person.

The Aetna data team merged the data with the information it had on patients it insured. The goal was to see how people’s personal interests and hobbies might relate to their health care costs. But Kaufman said it felt wrong: The information about the people who knitted or crocheted made her think of her grandmother. And the details about individuals who liked camping made her think of herself. What business did the insurance company have looking at this information? “It was a dataset that really dug into our clients’ lives,” she said. “No one gave anyone permission to do this.”

In a statement, Aetna said it uses consumer marketing information to supplement its claims and clinical information. The combined data helps predict the risk of repeat emergency room visits or hospital admissions. The information is used to reach out to members and help them and plays no role in pricing plans or underwriting, the statement said.

Kaufman said she had concerns about the accuracy of drawing inferences about an individual’s health from an analysis of a group of people with similar traits. Health scores generated from arrest records, home ownership and similar material may be wrong, she said.

Pam Dixon, executive director of the World Privacy Forum, a nonprofit that advocates for privacy in the digital age, shares Kaufman’s concerns. She points to a study by the analytics company SAS, which worked in 2012 with an unnamed major health insurance company to predict a person’s health care costs using 1,500 data elements, including the investments and types of cars people owned.

The SAS study said higher health care costs could be predicted by looking at things like ethnicity, watching TV and mail order purchases.

“I find that enormously offensive as a list,” Dixon said. “This is not health data. This is inferred data.”

Data scientist Cathy O’Neil said drawing conclusions about health risks on such data could lead to a bias against some poor people. It would be easy to infer they are prone to costly illnesses based on their backgrounds and living conditions, said O’Neil, author of the book “Weapons of Math Destruction,” which looked at how algorithms can increase inequality. That could lead to poor people being charged more, making it harder for them to get the care they need, she said. Employers, she said, could even decide not to hire people with data points that could indicate high medical costs in the future.

O’Neil said the companies should also measure how the scores might discriminate against the poor, sick or minorities.

American policymakers could do more to protect people’s information, experts said. In the United States, companies can harvest personal data unless a specific law bans it, although California just passed legislation that could create restrictions, said William McGeveran, a professor at the University of Minnesota Law School. Europe, in contrast, passed a strict law called the General Data Protection Regulation, which went into effect in May.

“In Europe, data protection is a constitutional right,” McGeveran said.

Pasquale, the University of Maryland law professor, said health scores should be treated like credit scores. Federal law gives people the right to know their credit scores and how they’re calculated. If people are going to be rated by whether they listen to sad songs on Spotify or look up information about AIDS online, they should know, Pasquale said. “The risk of improper use is extremely high. And data scores are not properly vetted and validated and available for scrutiny.”

As I reported this story I wondered how the data vendors might be using my personal information to score my potential health costs. So, I filled out a request on the LexisNexis website for the company to send me some of the personal information it has on me. A week later a somewhat creepy, 182-page walk down memory lane arrived in the mail. Federal law only requires the company to provide a subset of the information it collected about me. So that’s all I got.

LexisNexis had captured details about my life going back 25 years, many that I’d forgotten. It had my phone numbers going back decades and my home addresses going back to my childhood in Golden, Colorado. Each location had a field to show whether the address was “high risk.” Mine were all blank. The company also collects records of any liens and criminal activity, which, thankfully, I didn’t have.

My report was boring, which isn’t a surprise. I’ve lived a middle-class life and grown up in good neighborhoods. But it made me wonder: What if I had lived in “high risk” neighborhoods? Could that ever be used by insurers to jack up my rates — or to avoid me altogether?

I wanted to see more. If LexisNexis had health risk scores on me, I wanted to see how they were calculated and, more importantly, whether they were accurate. But the company told me that if it had calculated my scores it would have done so on behalf of their client, my insurance company. So, I couldn’t have them.

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Why Your Health Insurer Doesn’t Care About Your Big Bills

[Editor's note: today's guest post, by the reporters at ProPublica, discusses pricing and insurance problems within the healthcare industry, and a resource most consumers probably are unaware of. It is reprinted with permission.]

By Marshall Allen, ProPublica

Michael Frank ran his finger down his medical bill, studying the charges and pausing in disbelief. The numbers didn’t make sense.

His recovery from a partial hip replacement had been difficult. He’d iced and elevated his leg for weeks. He’d pushed his 49-year-old body, limping and wincing, through more than a dozen physical therapy sessions.

NYU Langone Health logo The last thing he needed was a botched bill.

His December 2015 surgery to replace the ball in his left hip joint at NYU Langone Medical Center in New York City had been routine. One night in the hospital and no complications.

Aetna Inc. logoHe was even supposed to get a deal on the cost. His insurance company, Aetna, had negotiated an in-network “member rate” for him. That’s the discounted price insured patients get in return for paying their premiums every month.

But Frank was startled to see that Aetna had agreed to pay NYU Langone $70,000. That’s more than three times the Medicare rate for the surgery and more than double the estimate of what other insurance companies would pay for such a procedure, according to a nonprofit that tracks prices.

Fuming, Frank reached for the phone. He couldn’t see how NYU Langone could justify these fees. And what was Aetna doing? As his insurer, wasn’t its duty to represent him, its “member”? So why had it agreed to pay a grossly inflated rate, one that stuck him with a $7,088 bill for his portion?

Frank wouldn’t be the first to wonder. The United States spends more per person on health care than any other country. A lot more. As a country, by many measures, we are not getting our money’s worth. Tens of millions remain uninsured. And millions are in financial peril: About 1 in 5 is currently being pursued by a collection agency over medical debt. Health care costs repeatedly top the list of consumers’ financial concerns.

Experts frequently blame this on the high prices charged by doctors and hospitals. But less scrutinized is the role insurance companies — the middlemen between patients and those providers — play in boosting our health care tab. Widely perceived as fierce guardians of health care dollars, insurers, in many cases, aren’t. In fact, they often agree to pay high prices, then, one way or another, pass those high prices on to patients — all while raking in healthy profits.

ProPublica and NPR are examining the bewildering, sometimes enraging ways the health insurance industry works, by taking an inside look at the games, deals and incentives that often result in higher costs, delays in care or denials of treatment. The misunderstood relationship between insurers and hospitals is a good place to start.

Today, about half of Americans get their health care benefits through their employers, who rely on insurance companies to manage the plans, restrain costs and get them fair deals.

But as Frank eventually discovered, once he’d signed on for surgery, a secretive system of pre-cut deals came into play that had little to do with charging him a reasonable fee.

After Aetna approved the in-network payment of $70,882 (not including the fees of the surgeon and anesthesiologist), Frank’s coinsurance required him to pay the hospital 10 percent of the total.

When Frank called NYU Langone to question the charges, the hospital punted him to Aetna, which told him it paid the bill according to its negotiated rates. Neither Aetna nor the hospital would answer his questions about the charges.

Frank found himself in a standoff familiar to many patients. The hospital and insurance company had agreed on a price and he was required to help pay it. It’s a three-party transaction in which only two of the parties know how the totals are tallied.

Frank could have paid the bill and gotten on with his life. But he was outraged by what his insurance company agreed to pay. “As bad as NYU is,” Frank said, “Aetna is equally culpable because Aetna’s job was to be the checks and balances and to be my advocate.”

And he also knew that Aetna and NYU Langone hadn’t double-teamed an ordinary patient. In fact, if you imagined the perfect person to take on insurance companies and hospitals, it might be Frank.

For three decades, Frank has worked for insurance companies like Aetna, helping to assess how much people should pay in monthly premiums. He is a former president of the Actuarial Society of Greater New York and has taught actuarial science at Columbia University. He teaches courses for insurance regulators and has even served as an expert witness for insurance companies.

The hospital and insurance company may have expected him to shut up and pay. But Frank wasn’t going away.

Patients fund the entire health care industry through taxes, insurance premiums and cash payments. Even the portion paid by employers comes out of an employee’s compensation. Yet when the health care industry refers to “payers,” it means insurance companies or government programs like Medicare.

Patients who want to know what they’ll be paying — let alone shop around for the best deal — usually don’t have a chance. Before Frank’s hip operation he asked NYU Langone for an estimate. It told him to call Aetna, which referred him back to the hospital. He never did get a price.

Imagine if other industries treated customers this way. The price of a flight from New York to Los Angeles would be a mystery until after the trip. Or, while digesting a burger, you’d learn it cost 50 bucks.

A decade ago, the opacity of prices was perhaps less pressing because medical expenses were more manageable. But now patients pay more and more for monthly premiums, and then, when they use services, they pay higher co-pays, deductibles and coinsurance rates.

Employers are equally captive to the rising prices. They fund benefits for more than 150 million Americans and see health care expenses eating up more and more of their budgets.

Richard Master, the founder and CEO of MCS Industries Inc. in Easton, Pennsylvania, offered to share his numbers. By most measures MCS is doing well. Its picture frames and decorative mirrors are sold at Walmart, Target and other stores and, Master said, the company brings in more than $200 million a year.

But the cost of health care is a growing burden for MCS and its 170 employees. A decade ago, Master said, an MCS family policy cost $1,000 a month with no deductible. Now it’s more than $2,000 a month with a $6,000 deductible. MCS covers 75 percent of the premium and the entire deductible. Those rising costs eat into every employee’s take-home pay.

Economist Priyanka Anand of George Mason University said employers nationwide are passing rising health care costs on to their workers by asking them to absorb a larger share of higher premiums. Anand studied Bureau of Labor Statistics data and found that every time health care costs rose by a dollar, an employee’s overall compensation got cut by 52 cents.

Master said his company hops between insurance providers every few years to find the best benefits at the lowest cost. But he still can’t get a breakdown to understand what he’s actually paying for.

“You pay for everything, but you can’t see what you pay for,” he said.

Master is a CEO. If he can’t get answers from the insurance industry, what chance did Frank have?

Frank’s hospital bill and Aetna’s “explanation of benefits” arrived at his home in Port Chester, New York, about a month after his operation. Loaded with an off-putting array of jargon and numbers, the documents were a natural playing field for an actuary like Frank.

Under the words, “DETAIL BILL,” Frank saw that NYU Langone’s total charges were more than $117,000, but that was the sticker price, and those are notoriously inflated. Insurance companies negotiate an in-network rate for their members. But in Frank’s case at least, the “deal” still cost $70,882.

With a practiced eye, Frank scanned the billing codes hospitals use to get paid and immediately saw red flags: There were charges for physical therapy sessions that never took place, and drugs he never received. One line stood out — the cost of the implant and related supplies. Aetna said NYU Langone paid a “member rate” of $26,068 for “supply/implants.” But Frank didn’t see how that could be accurate. He called and emailed Smith & Nephew, the maker of his implant, until a representative told him the hospital would have paid about $1,500. His NYU Langone surgeon confirmed the amount, Frank said. The device company and surgeon did not respond to ProPublica’s requests for comment.

Frank then called and wrote Aetna multiple times, sure it would want to know about the problems. “I believe that I am a victim of excessive billing,” he wrote. He asked Aetna for copies of what NYU Langone submitted so he could review it for accuracy, stressing he wanted “to understand all costs.”

Aetna reviewed the charges and payments twice — both times standing by its decision to pay the bills. The payment was appropriate based on the details of the insurance plan, Aetna wrote.

Frank also repeatedly called and wrote NYU Langone to contest the bill. In its written reply, the hospital didn’t explain the charges. It simply noted that they “are consistent with the hospital’s pricing methodology.”

Increasingly frustrated, Frank drew on his decades of experience to essentially serve as an expert witness on his own case. He gathered every piece of relevant information to understand what happened, documenting what Medicare, the government’s insurance program for the disabled and people over age 65, would have paid for a partial hip replacement at NYU Langone — about $20,491 — and what FAIR Health, a New York nonprofit that publishes pricing benchmarks, estimated as the in-network price of the entire surgery, including the surgeon fees — $29,162.

He guesses he spent about 300 hours meticulously detailing his battle plan in two inches-thick binders with bills, medical records and correspondence.

ProPublica sent the Medicare and FAIR Health estimates to Aetna and asked why they had paid so much more. The insurance company declined an interview and said in an emailed statement that it works with hospitals, including NYU Langone, to negotiate the “best rates” for members. The charges for Frank's procedure were correct given his coverage, the billed services and the Aetna contract with NYU Langone, the insurer wrote.

NYU Langone also declined ProPublica’s interview request. The hospital said in an emailed statement it billed Frank according to the contract Aetna had negotiated on his behalf. Aetna, it wrote, confirmed the bills were correct.

After seven months, NYU Langone turned Frank’s $7,088 bill over to a debt collector, putting his credit rating at risk. “They upped the ante,” he said.

Frank sent a new flurry of letters to Aetna and to the debt collector and complained to the New York State Department of Financial Services, the insurance regulator, and to the New York State Office of the Attorney General. He even posted his story on LinkedIn.

But no one came to the rescue. A year after he got the first bills, NYU Langone sued him for the unpaid sum. He would have to argue his case before a judge.

You’d think that health insurers would make money, in part, by reducing how much they spend.

Turns out, insurers don’t have to decrease spending to make money. They just have to accurately predict how much the people they insure will cost. That way they can set premiums to cover those costs — adding about 20 percent to for their administration and profit. If they’re right, they make money. If they’re wrong, they lose money. But, they aren’t too worried if they guess wrong. They can usually cover losses by raising rates the following year.

Frank suspects he got dinged for costing Aetna too much with his surgery. The company raised the rates on his small group policy — the plan just includes him and his partner — by 18.75 percent the following year.

The Affordable Care Act kept profit margins in check by requiring companies to use at least 80 percent of the premiums for medical care. That’s good in theory but it actually contributes to rising health care costs. If the insurance company has accurately built high costs into the premium, it can make more money. Here’s how: Let’s say administrative expenses eat up about 17 percent of each premium dollar and around 3 percent is profit. Making a 3 percent profit is better if the company spends more.

It’s like if a mom told her son he could have 3 percent of a bowl of ice cream. A clever child would say, “Make it a bigger bowl.”

Wonks call this a “perverse incentive.”

“These insurers and providers have a symbiotic relationship,” said Wendell Potter, who left a career as a public relations executive in the insurance industry to become an author and patient advocate. “There’s not a great deal of incentive on the part of any players to bring the costs down.”

Insurance companies may also accept high prices because often they aren’t always the ones footing the bill. Nowadays about 60 percent of the employer benefits are “self-funded.” That means the employer pays the bills. The insurers simply manage the benefits, processing claims and giving employers access to their provider networks. These management deals are often a large, and lucrative, part of a company’s business. Aetna, for example, insured 8 million people in 2017, but provided administrative services only to considerably more — 14 million.

To woo the self-funded plans, insurers need a strong network of medical providers. A brand-name system like NYU Langone can demand — and get — the highest payments, said Manuel Jimenez, a longtime negotiator for insurers including Aetna. “They tend to be very aggressive in their negotiations.”

On the flip side, insurers can dictate the terms to the smaller hospitals, Jimenez said. The little guys, “get the short end of the stick,” he said. That’s why they often merge with the bigger hospital chains, he said, so they can also increase their rates.

Other types of horse-trading can also come into play, experts say. Insurance companies may agree to pay higher prices for some services in exchange for lower rates on others.

Patients, of course, don’t know how the behind-the-scenes haggling affects what they pay. By keeping costs and deals secret, hospitals and insurers dodge questions about their profits, said Dr. John Freedman, a Massachusetts health care consultant. Cases like Frank’s “happen every day in every town across America. Only a few of them come up for scrutiny.”

In response, a Tennessee company is trying to expose the prices and steer patients to the best deals. Healthcare Bluebook aims to save money for both employers who self-pay, and their workers. Bluebook used payment information from self-funded employers to build a searchable online pricing database that shows the low-, medium- and high-priced facilities for certain common procedures, like MRIs. The company, which launched in 2008, now has more than 4,500 companies paying for its services. Patients can get a $50 bonus for choosing the best deal.

Bluebook doesn’t have price information for Frank’s operation — a partial hip replacement. But its price range in the New York City area for a full hip replacement is from $28,000 to $77,000, including doctor fees. Its “fair price” for these services tops out at about two-thirds of what Aetna agreed to pay on Frank’s behalf.

Frank, who worked with mainstream insurers, didn’t know about Bluebook. If he had used its data, he would have seen that there were facilities that were both high quality and offered a fair price near his home, including Holy Name Medical Center in Teaneck, New Jersey, and Greenwich Hospital in Connecticut. NYU Langone is one of Bluebook’s highest-priced, high-quality hospitals in the area for hip replacements. Others on Bluebook’s pricey list include Montefiore New Rochelle Hospital in New Rochelle, New York, and Hospital for Special Surgery in Manhattan.

ProPublica contacted Hospital for Special Surgery to see if it would provide a price for a partial hip replacement for a patient with an Aetna small-group plan like Frank’s. The hospital declined, citing its confidentiality agreements with insurance companies.

Frank arrived at the Manhattan courthouse on April 2 wearing a suit and fidgeted in his seat while he waited for his hearing to begin. He had never been sued for anything, he said. He and his attorney, Gabriel Nugent, made quiet conversation while they waited for the judge.

In the back of the courtroom, NYU Langone’s attorney, Anton Mikofsky, agreed to talk about the lawsuit. The case is simple, he said. “The guy doesn’t understand how to read a bill.”

The high price of the operation made sense because NYU Langone has to pay its staff, Mikofsky said. It also must battle with insurance companies who are trying to keep costs down, he said. “Hospitals all over the country are struggling,” he said.

“Aetna reviewed it twice,” Mikofsky added. “Didn’t the operation go well? He should feel blessed.”

When the hearing started, the judge gave each side about a minute to make its case, then pushed them to settle.

Mikofsky told the judge Aetna found nothing wrong with the billing and had already taken care of most of the charges. The hospital’s position was clear. Frank owed $7,088.

Nugent argued that the charges had not been justified and Frank felt he owed about $1,500.

The lawyers eventually agreed that Frank would pay $4,000 to settle the case.

Frank said later that he felt compelled to settle because going to trial and losing carried too many risks. He could have been hit with legal fees and interest. It would have also hurt his credit at a time he needs to take out college loans for his kids.

After the hearing, Nugent said a technicality might have doomed their case. New York defendants routinely lose in court if they have not contested a bill in writing within 30 days, he said. Frank had contested the bill over the phone with NYU Langone, and in writing within 30 days with Aetna. But he did not dispute it in writing to the hospital within 30 days.

Frank paid the $4,000, but held on to his outrage. “The system,” he said, “is stacked against the consumer.”

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Federal Regulators Assess $1 Billion Fine Against Wells Fargo Bank

On Friday, several federal regulators announced the assessment of a $1 billion fine against Wells Fargo Bank for violations of the, "Consumer Financial Protection Act (CFPA) in the way it administered a mandatory insurance program related to its auto loans..."

Consumer Financial Protection Bureau logo The Consumer Financial Protection Bureau (CFPB) announced the fine and settlement with Wells Fargo Bank, N.A., and its coordinated action with the Office of the Comptroller of the Currency (OCC). The announcement stated that the CFPB:

"... also found that Wells Fargo violated the CFPA in how it charged certain borrowers for mortgage interest rate-lock extensions. Under the terms of the consent orders, Wells Fargo will remediate harmed consumers and undertake certain activities related to its risk management and compliance management. The CFPB assessed a $1 billion penalty against the bank and credited the $500 million penalty collected by the OCC toward the satisfaction of its fine."

Wells Fargo logo This not the first fine against Wells Fargo. The bank paid a $185 million fine in 2016 to settle charges about for alleged unlawful sales practices during the past five years. To game an internal sales system, employees allegedly created about 1.5 million bogus email accounts, and both issued and activated debit cards associated with the secret accounts. Then, employees also created PIN numbers for the accounts, all without customers' knowledge nor consent. An investigation in 2017 found millions more bogus accounts created than originally found in 2016. Also in 2017, irregularities were reported about how the bank handled mortgages.

The OCC explained that it took action:

"... given the severity of the deficiencies and violations of law, the financial harm to consumers, and the bank’s failure to correct the deficiencies and violations in a timely manner. The OCC found deficiencies in the bank’s enterprise-wide compliance risk management program that constituted reckless, unsafe, or unsound practices and resulted in violations of the unfair practices prong of Section 5 of the Federal Trade Commission (FTC) Act. In addition, the agency found the bank violated the FTC Act and engaged in unsafe and unsound practices relating to improper placement and maintenance of collateral protection insurance policies on auto loan accounts and improper fees associated with interest rate lock extensions. These practices resulted in consumer harm which the OCC has directed the bank to remediate.

The $500 million civil money penalty reflects a number of factors, including the bank’s failure to develop and implement an effective enterprise risk management program to detect and prevent the unsafe or unsound practices, and the scope and duration of the practices..."

MarketWatch explained the bank's unfair and unsound practices:

"When consumers buy a vehicle through a lender, the lender often requires the consumer to also purchase “collateral protection insurance.” That means the vehicle itself is collateral — or essentially, could be repossessed — if the loan is not paid... Sometimes, the fine print of the contracts say that if borrowers do not buy their own insurance (enough to satisfy the terms of the loan), the lender will go out and purchase that insurance on their behalf, and charge them for it... That is a legal practice. But in the case of Wells Fargo, borrowers said they actually did buy that insurance, and Wells Fargo still bought more insurance on their behalf and charged them for it."

So, the bank forced consumers to buy unwanted and unnecessary auto insurance. The lesson for consumers: don't accept the first auto loan offered, and closely read the fine print of contracts from lenders. Wells Fargo said in a news release that it:

"... will adjust its first quarter 2018 preliminary financial results by an additional accrual of $800 million, which is not tax deductible. The accrual reduces reported first quarter 2018 net income by $800 million, or $0.16 cents per diluted common share, to $4.7 billion, or 96 cents per diluted common share. Under the consent orders, Wells Fargo will also be required to submit, for review by its board, plans detailing its ongoing efforts to strengthen its compliance and risk management, and its approach to customer remediation efforts."

Kudos to the OCC and CFPB for taking this action against a bank with a spotty history. Will executives at Wells Fargo learn their lessons from the massive fine? The Washington Post reported that the bank will:

"... benefit from a massive corporate tax cut passed by Congress last year. he bank’s effective tax rate this year will fall from about 33 percent to 22 percent, according to a Goldman Sachs analysis released in December. The change could boost its profits by 18 percent, according to the analysis. Just in the first quarter, Wells Fargo’s effective tax rate fell from about 28 percent to 18 percent, saving it more than $600 million. For the entire year, the tax cut is expected to boost the company’s profits by $3.7 billion..."

So, don't worry about the bank. It's tax savings will easily offset the fine. This makes one doubt the fine was a sufficient deterrent. And, I found the OCC's announcement forceful and appropriate, while the CFPB's announcement seemed to soft-pedal things by saying the absolute minimum.

What do you think? Will the fine curb executive wrongdoing?


Report: Several Impacts From Technology Changes Within The Financial Services Industry

For better or worse, the type of smart device you use can identify you in ways you may not expect. First, a report by London-based Privacy International highlighted the changes within the financial services industry:

"Financial services are changing, with technology being a key driver. It is affecting the nature of financial services from credit and lending through to insurance and even the future of money itself. The field known as “fintech” is where the attention and investment is flowing. Within it, new sources of data are being used by existing institutions and new entrants. They are using new forms of data analysis. These changes are significant to this sector and the lives of the people it serves. We are seeing dramatic changes in the ways that financial products make decisions. The nature of the decision-making is changing, transforming the products in the market and impacting on end results and bottom lines. However, this also means that treatment of individuals will change. This changing terrain of finance has implications for human rights, privacy and identity... Data that people would consider as having nothing to do with the financial sphere, such as their text-messages, is being used at an increasing rate by the financial sector...  Yet protections are weak or absent... It is essential that these innovations are subject to scrutiny... Fintech covers a broad array of sectors and technologies. A non-exhaustive list includes:

  • Alternative credit scoring (new data sources for credit scoring)
  • Payments (new ways of paying for goods and services that often have implications for the data generated)
  • Insurtech (the use of technology in the insurance sector)
  • Regtech (the use of technology to meet regulatory requirements)."

"Similarly, a breadth of technologies are used in the sector, including: Artificial Intelligence; Blockchain; the Internet of Things; Telematics and connected cars..."

While the study focused upon India and Kenya, it has implications for consumers worldwide. More observations and concerns:

"Social media is another source of data for companies in the fintech space. However, decisions are made not on just on the content of posts, but rather social media is being used in other ways: to authenticate customers via facial recognition, for instance... blockchain, or distributed ledger technology, is still best known for cryptocurrencies like BitCoin. However, the technology is being used more broadly, such as the World Bank-backed initiative in Kenya for blockchain-backed bonds10. Yet it is also used in other fields, like the push in digital identities11. A controversial example of this was a very small-scale scheme in the UK to pay benefits using blockchain technology, via an app developed by the fintech GovCoin12 (since renamed DISC). The trial raised concerns, with the BBC reporting a former member of the Government Digital Service describing this as "a potentially efficient way for Department of Work and Pensions to restrict, audit and control exactly what each benefits payment is actually spent on, without the government being perceived as a big brother13..."

Many consumers know that you can buy a wide variety of internet-connected devices for your home. That includes both devices you'd expect (e.g., televisions, printers, smart speakers and assistants, security systems, door locks and cameras, utility meters, hot water heaters, thermostats, refrigerators, robotic vacuum cleaners, lawn mowers) and devices you might not expect (e.g., sex toys, smart watches for children, mouse traps, wine bottlescrock pots, toy dolls, and trash/recycle bins). Add your car or truck to the list:

"With an increasing number of sensors being built into cars, they are increasingly “connected” and communicating with actors including manufacturers, insurers and other vehicles15. Insurers are making use of this data to make decisions about the pricing of insurance, looking for features like sharp acceleration and braking and time of day16. This raises privacy concerns: movements can be tracked, and much about the driver’s life derived from their car use patterns..."

And, there are hidden prices for the convenience of making payments with your favorite smart device:

"The payments sector is a key area of growth in the fintech sector: in 2016, this sector received 40% of the total investment in fintech22. Transactions paid by most electronic means can be tracked, even those in physical shops. In the US, Google has access to 70% of credit and debit card transactions—through Google’s "third-party partnerships", the details of which have not been confirmed23. The growth of alternatives to cash can be seen all over the world... There is a concerted effort against cash from elements of the development community... A disturbing aspect of the cashless debate is the emphasis on the immorality of cash—and, by extension, the immorality of anonymity. A UK Treasury minister, in 2012, said that paying tradesman by cash was "morally wrong"26, as it facilitated tax avoidance... MasterCard states: "Contrary to transactions made with a MasterCard product, the anonymity of digital currency transactions enables any party to facilitate the purchase of illegal goods or services; to launder money or finance terrorism; and to pursue other activity that introduces consumer and social harm without detection by regulatory or police authority."27"

The report cited a loss of control by consumers over their personal information. Going forward, the report included general and actor-specific recommendations. General recommendations:

  • "Protecting the human right to privacy should be an essential element of fintech.
  • Current national and international privacy regulations should be applicable to fintech.
  • Customers should be at the centre of fintech, not their product.
  • Fintech is not a single technology or business model. Any attempt to implement or regulate fintech should take these differences into account, and be based on the type activities they perform, rather than the type of institutions involved."

Want to learn more? Follow Privacy International on Facebook, on Twitter, or read about 10 ways of "Invisible Manipulation" of consumers.


Some U.S. Hospitals Don’t Put Americans First for Liver Transplants

[Editor's note: today's guest blog post, by the reporters at ProPublica, discusses a largely unknown practice by some hospitals in the health care industry. Is this practice right? Ethical? Today's post is reprinted with permission.]

By Charles Ornstein, ProPublica

Earlier this fall, a leader of the busiest hospital for organ transplants in New York state — where livers are particularly scarce — pleaded for fairer treatment for ailing New Yorkers.

“Patients in equal need of a liver transplant should not have to wait and suffer differently because of the U.S. state where they reside,” wrote Dr. Herbert Pardes, former chief executive and now executive vice president of the board at NewYork-Presbyterian Hospital.

But Pardes left out his hospital’s own contribution to the shortage: From 2013 to 2016, it gave 20 livers to foreign nationals who came to the United States solely for a transplant — essentially exporting the organs and removing them from the pool available to New Yorkers.

That represented 5.2 percent of the hospital’s liver transplants during that time, one of the highest ratios in the country.

Little known to the public, or to sick patients and their families, organs donated domestically are sometimes given to patients flying in from other countries, who often pay a premium. Some hospitals even seek out foreign patients in need of a transplant. A Saudi Arabian company, Ansaq Medical Co., whose stated aim is to “facilitate the procedures and mechanisms of ‘medical tourism,’” said it signed an agreement with Ochsner Medical Center in New Orleans in 2015.

The practice is legal, and foreign nationals must wait their turn for an organ in the same way as domestic patients. Transplant centers justify it on medical and humanitarian grounds. But at a time when President Donald Trump is espousing an “America First” policy and seeking to ban visitors and refugees from certain countries, allocating domestic organs to foreigners may run counter to the national mood.

Even beyond the realm of health care, some are questioning whether foreigners should be able to access limited spots that might otherwise be available to U.S. citizens. For instance, public colleges compensate for reductions in state funding by accepting more foreign students paying higher tuition, and critics say in-state students are being denied opportunities as a result.

Dr. Sander Florman, director of the transplant institute at the Mount Sinai Hospital in New York, said he struggles with “in essence, selling the organs we do have to foreign nationals with bushels of money.”

Mount Sinai has not performed any transplants on patients who came to this country specifically for that purpose, but it has done so for international patients here for other reasons.

Between 2013 and 2016, 252 foreigners came to the U.S. purely to receive livers at American hospitals. In 2016, the most recent year for which data is available, the majority of foreign recipients were from countries in the Middle East, including Saudi Arabia, Kuwait, Israel and United Arab Emirates. Another 100 foreigners staying in the U.S. as non-residents also received livers.

All the while, more than 14,000 people, nearly all of them American citizens, are waiting for liver transplants, a figure that has remained stubbornly high for decades. By comparison, fewer than 8,000 liver transplants were performed last year in the United States — and that was an all-time high. The national median wait time for a liver is more than 14 months, and in states like New York, the wait is far longer. (The wait for livers varies from one state to the next, depending on such factors as the number of organ donors, and the resourcefulness of organ procurement agencies.)

Many patients die before reaching the front of the line. In 2016, more than 2,600 patients were removed from waiting lists nationally because they either died or were too sick to receive a liver transplant.

Most transplant centers only serve American citizens or residents, either by happenstance or by design. Foreign transplants are concentrated among a handful of centers, including NewYork-Presbyterian, Memorial Hermann-Texas Medical Center in Houston (31 such transplants from 2013 to 2016), Ochsner (30), and Cleveland Clinic in Ohio (21).

“When you take people from other parts of the world and provide an organ transplant to them rather than someone who’s here, there’s a real cost, there’s a real life that’s lost,” said Jane Hartsock, a visiting assistant professor of medical humanities and health studies at the Indiana University School of Liberal Arts. Hartsock and her colleagues wrote a journal article published last year saying foreigners should be last in line for a transplant.

NewYork-Presbyterian said it does not advertise its transplant program to foreign patients and that the majority of the transplants it performed on foreign nationals traveling to New York for that reason — 11 of the 20 — were on children under 18.

In a statement, the hospital and its academic partner Columbia University said they follow federal guidelines. “We strongly support efforts that aim to address the critical issue of equitable distribution of livers for transplant and are working closely with a wide range of stakeholders to help increase the number of organ donor registrations in New York State.”

A spokeswoman for the Cleveland Clinic, Eileen Sheil, said her hospital does not actively seek out foreign national business and has a “thoughtful and ethical approach that is well within the rules and aligned with our overall mission for taking care of patients.” Ochsner similarly said, “patients seek out Ochsner’s expertise because of our relentless commitment to provide the highest-quality, complex care.” Memorial Hermann did not respond to requests for comment.

To be sure, the proportion of available livers that go to foreigners is tiny — slightly less than 1 percent of liver transplants nationwide from 2013 to 16. The figure appears to be dropping further in 2017. Even if all recipients were Americans, wait times would still be substantial. Moreover, foreigners queue up on the waitlist like everybody else — although it may be easier for them, since they aren’t rooted in any particular state, to choose a hospital in an area with a shorter wait, such as Ochsner. And some Americans discouraged by the lengthy wait in this country have gone abroad for transplants.

The transplant figures in this article do not include transplants involving living donors, meaning a relative or friend who donates part of his or her liver to a patient. No one interviewed for this story said it is inappropriate for a foreign national to come to the U.S. for a procedure with a living donor.

There’s also an important distinction between giving an organ to a foreigner who happens to be in the U.S. — someone on a student visa or even an undocumented immigrant — and giving one to someone flying over just for surgery. Someone in the first group would be eligible to donate an organ if something happened to them in this country; someone in the latter group would not because livers must be transplanted quickly and there wouldn’t be enough time to ship them.

“If you live in the United States, no matter what your [citizenship] status is, you could potentially be an organ donor if you get hit by a car or something happens to you,” said Dr. Gabriel M. Danovitch, medical director of the kidney and pancreas transplant program at Ronald Reagan UCLA Medical Center, who previously led the UNOS international relations committee. “But if your home is somewhere else, a long way away, there’s no way that you can be a donor or your family or your friends could be donors.

“And in some respects, when you then come to the United States, you are using up a valuable resource that is in great shortage here.”

Foreign patients generally are not entitled to the same discounts as those with private insurance or Medicare, the federal insurance program for seniors and the disabled. In 2015, for instance, the average sticker price for a liver transplant at NewYork-Presbyterian was $371,203, but the average payment for patients in Medicare was less than one-third of that, $112,469, according to data from the Centers for Medicare and Medicaid Services, which runs Medicare. In the case of Saudi Arabia, its embassy in Washington often guarantees payment for patients.

The topic is emerging now because the nation’s transplant leaders will meet next month to consider rewriting the rules governing how livers are distributed, giving programs in New York City, Los Angeles, Chicago and other areas greater access to organs from people who die in nearby regions. The proposal by a committee of the United Network for Organ Sharing, the federal contractor that runs the national transplant system, faces opposition from programs and regions that stand to lose organs. Pardes’ comments were posted in an online comment forum devoted to the proposal, which does not address the issue of transplants for foreigners.

UNOS said it has worked to get better data on foreigners that receive transplants in this country but ultimately, federal law doesn’t prohibit these transplants.

“This is an individual medical decision that the individual transplant hospital makes,” spokesman Joel Newman said. “If we addressed citizenship or residency as a particular reason for whether to accept a patient or not, then that would open up the door to lots of other nonmedical criteria — religion, race, political preference, any number of things that as a community we have decided from an ethical standpoint not to consider.”

UNOS has the authority to ask questions of transplant centers about surgeries on foreign nationals, but Newman said UNOS committees are still trying to figure out what information they would want, and, in any event, the transplant centers don’t have to answer the questions.

The federal rules governing the transplant system, written more than three decades ago, say organ allocation decisions must be based on medical criteria, which would exclude consideration of a person’s nationality or citizenship. While centers can perform as many transplants on foreigners as they want, many programs have tried to keep them below 5 percent of all transplants for each organ type. Until several years ago, 5 percent was the threshold above which UNOS could audit a program. No programs were ever formally audited, and the cutoff was eventually eliminated.

It’s time to revisit the rules, some lawmakers say.

“As a general rule, you’ve got to take care of Americans first as long as you have more demand than supply,” said Sen. John Kennedy, R-La., whose state is home to Ochsner, a leader in transplants for foreign nationals. Kennedy said he would favor curbing transplants for foreigners, while creating a national board that could make exceptions. “But what you don’t want to get into, it seems to me, is subjective areas like well, ‘If this person could live an extra few years, what could they contribute to society?’”

There have been scandals in the past about foreigners and organ transplants. In 2005, a liver transplant center in Los Angeles shut its doors after disclosing that its team had taken a liver that should have gone to a patient at another hospital and instead had implanted it in a Saudi national. The hospital said its staff members falsified documents to cover up the incident.

The University of California, Los Angeles, came under fire in 2008 for performing liver transplants on a powerful Japanese gang boss and other men linked to Japanese gangs, and then receiving donations afterward from at least two of the men. The hospital and its surgeon said they do not make moral judgments about patients.

Further complicating matters is a 2008 document endorsed by transplant organizations around the world, called the Declaration of Istanbul, which seeks to eliminate organ trafficking and reduce transplant tourism internationally. One concern was that patients went to China and received transplants using organs from prisoners. (China said it was stopping the practice in 2015, but experts question whether that has happened.) Another concern was that if a country’s wealthiest or most powerful residents could get transplants overseas, its leaders may not have an incentive to set up a system of their own.

The non-binding declaration also says that there should be a ban on “soliciting, or brokering for the purpose of transplant commercialism, organ trafficking, or transplant tourism.” It was endorsed by UNOS and other national transplant groups.

Former Ochsner employees say they recall Saudi nationals coming for transplants, some wealthy and some not. A New Orleans bar posted a photo on Facebook in 2015 of a young man who brought his mom from Saudi Arabia for a transplant.

Ochsner said in a statement that it was proud of its liver transplant program, which is the nation’s largest. It said that it is willing to accept donated organs that other centers turn down for medical reasons, expanding its ability to help patients while keeping its survival rate high. And it noted that the median waiting time for its patients is only 2.1 months, far below the national median.

“UNOS does not have any restrictions preventing transplant for international patients and they are subject to the same guidelines as domestic patients,” the statement said.

Still, many American candidates for livers don’t make Ochsner’s waiting list. It refused to put Brian “Bubba” Greenlee Jr. on its list right after Christmas in 2015, because of his “poor insight into his drinking and lack of proper social support,” his medical records show. He had cirrhosis and died weeks later at age 45.

His sister, Theresa Greenlee-Jeffers, said Ochsner led her brother to believe that he would get a new liver. Her brother had stopped drinking and she had volunteered to take care of him after a transplant, but then the hospital suddenly reversed course.

“His last Christmas, he was given false hope that he was going to get a transplant. That’s not OK. You don’t play with somebody’s emotions like that,” Greenlee-Jeffers said.

Ocshner did not answer questions about Greenlee’s care but said in its statement, “Not every patient is a candidate for transplant.” It said its criteria are similar to those of other liver transplant centers.

“At Ochsner, we are caregivers, dedicated to providing our patients with high-quality care, improved outcomes and the gift of a second chance at life,” its statement said.

Greenlee-Jeffers wonders if Ochsner excluded her brother and other Americans to make room for foreigners willing to pay more. “It’s not OK,” she said. “We need to take care of our people here at home first. We don’t have enough of this to go around.”

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Consequences And New Threats From The Massive Equifax Breach

Equifax logo To protect themselves and their sensitive information, many victims of the massive Equifax data breach have signed up for the free credit monitoring and fraud resolution services Equifax arranged. That's a good start. Some victims have gone a step further and placed Fraud Alerts or Security Freezes on their credit reports at Equifax, Experian, and TransUnion. That's good, too. But, is that enough?

The answer to that question requires an understanding of what criminals can do with the sensitive information accessed stolen during the Equifax breach. Criminals can commit types of fraud which credit monitoring, credit report alerts, and freezes cannot stop. Consumer Reports (CR) explained:

"Freezing your credit report specifically at Equifax will also prevent crooks from registering as you at the government website, my Social Security, and block them from attempting to steal your Social Security benefits. But taking these steps won't protect you against every identity fraud threat arising from the Equifax data breach."

Sadly, besides credit and loan fraud the Equifax breach exposed breach victims to tax refund fraud, health care fraud, and driver's license (identity) fraud. This is what makes the data breach particularly nasty. CR also listed the data elements criminals use with each type of fraud:

"With your Social Security number, crooks can file false income tax returns in your name, take bogus deductions, and steal the resulting refund. More than 14,000 fraudulent 2016 tax returns, with $92 million in unwarranted refunds, were detected and stopped by the Internal Revenue Service (IRS) as of last March... Data from the Equifax breach can be used to steal your benefits from private health insurance, Medicare, or Medicaid when the identity thief uses your coverage to pay for his own medical treatment and prescriptions... Using your driver’s license number, identity thieves can create bogus driver’s licenses and hang their moving violations on you...."

The CR article suggested several ways for consumers to protect themselves from each type of fraud: a) request an Identity Protection PIN number from the IRS; b) request copies of your medical file from your providers and review your MIB Consumer File each year; and c) request a copy of your driving license record and get your free annual consumer report from ChexSystemsCertegy, and TeleCheck -  the three major check verification companies.

Never considered reviewing your tax account with the IRS? You can. Never heard of a Consumer MIB File? I'm not surprised. Most people haven't. I encourage consumers to read the entire CR article. While at the CR site, read their review of TrustedID Premier service which Equifax arranged for breach victims. It's an eye-opener.

Do these solutions sound like a lot of preventative work? They are. You have Equifax to thank for that. Will Equifax help breach victims with the time and effort required to research and implement the solutions CR recommended? Will Equifax compensate breach victims for the costs incurred with these solutions? These are questions breach victims should ask Equifax and TrustedID Premier.

Consumers and breach victims are slowly learning the consequences of a data breach are extensive. The consequences include time, effort, money, and aggravation. You might say breach victims have been mugged. Worse, consumers are saddled the burden from the consequences. That isn't fair. The companies making money by selling consumers' credit reports and information should be responsible for the burdens. Things are out of balance.

What are your opinions?


$5.5 Million Settlement Agreement Between Nationwide Insurance And 32 States

Nationwide Mutual Insurance Company logo Last week, 32 states inked a settlement agreement with Nationwide Mutual Insurance for the insurance company's data breach in 2012. The Attorney General's Office for the Commonwealth of Massachusetts participated in the agreement, and explained in an announcement: that the data breach reach in 2012 was:

"... allegedly caused by Nationwide’s failure to apply a critical software security patch. The breach resulted in the loss of personal information belonging to 1.27 million consumers, with nearly 950 in Massachusetts, including their social security numbers, driver’s license numbers, credit scoring information, and other personal data. The lost personal information was collected by Nationwide in order to provide insurance quotes to consumers applying for insurance. AG Healey’s Office is not aware of any fraud or identity theft involving Massachusetts residents related to this data breach."

Other states participating in the settlement agreement include the Attorneys General of Alaska, Arizona, Arkansas, Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, and the District of Columbia. Terms of the settlement agreement require Nationwide to:

"... both generally update its security practices and to ensure that it keeps software up-to-date, including timely applying patches and other updates to its software. Nationwide must also hire a technology officer responsible for monitoring and managing software and application security updates, including supervising employees responsible for evaluating and coordinating the maintenance, management, and application of all security patches and software and application security updates.

Many of the consumers whose data was lost as a result of the data breach were consumers who never became Nationwide’s insureds, but whose information was retained by the company in order to provide the consumers re-quotes at a later date. The settlement requires Nationwide to be more transparent about its data collection practices by requiring it to disclose to consumers that it retains their personal information even if they do not become its customers."

950 Massachusetts residents were affected. Massachusetts' share of the payment is $100,000. Massachusetts Attorney General (AG) Maura Healey said in a statement:

"People shopping for financial products should be assured that companies collecting their personal information will protect it no matter what... Nationwide knew their software was vulnerable to hacking but did not promptly address it, leaving sensitive data vulnerable to identity thieves. This settlement holds the company accountable for subjecting our residents to this avoidable risk."

2,810 New York residents were affected. New York State's share of the payment is $107,736. New York State AG Eric T. Schneiderman said:

"Nationwide demonstrated true carelessness while collecting and retaining information from prospective customers, needlessly exposing their personal data in the process... This settlement should serve as a reminder that companies have a responsibility to protect consumers’ personal information regardless of whether or not those consumers become customers..."

774 Connecticut residents were affected. Connecticut's share of the payment is $256,559. Connecticut AG George Jepsen said:

"Connecticut law requires that anyone in possession of another person's personal information safeguard that data... It is critically important that companies take seriously the maintenance of their computer software systems and their data security protocols..."


Homeowners Receive $6.3 Million In Refunds Due To Improper Charges By Insurance Company

Assurant logo Last week, the Attorney General's office for the Commonwealth of Massachusetts announced the results of a post-settlement agreement audit with American Security Insurance Company, a subsidiary of Assurant, Inc., where homeowners in the state will receive $6.3 million in refunds for improper "forced-place insurance" charges. The announcement explained:

"Force-placed insurance is a type of property insurance that mortgage servicers can purchase on behalf of borrowers if they fail to maintain adequate homeowners insurance coverage on mortgaged properties. Mortgage servicers often hire insurance companies like Assurant to monitor whether borrowers are maintaining adequate homeowners insurance coverage and to issue force-placed insurance policies when appropriate homeowners coverage is not in place.

Premiums for force-placed policies are high—often two or three times as expensive as regular homeowners insurance—and the coverage provided is quite limited. Some mortgage servicers accept commission payments from force-placed insurers, which contribute to the high cost of force-placed insurance and create conflicts of interest for mortgage servicers."

The settlement agreement was first announced in November, 2015. The latest announcement described the results of the audit:

"Although force-placed insurance is only intended for circumstances in which the borrower has failed to adequately insure the mortgaged property, the Attorney General’s audit of Assurant found thousands of cases of duplicative insurance coverage for Massachusetts homeowners. Borrowers eligible for settlement money were previously required by their mortgage servicer to purchase force-placed insurance from Assurant, or were overcharged for force-placed insurance because they were mistakenly sold commercial policies rather than less expensive residential policies..."

4,500 homeowners were improperly charged. The average refund per homeowner is about $1,400. Refund checks were mailed last week to affected homeowners.


Wells Fargo Forced Customers To Buy Unwanted And Unnecessary Auto Insurance

Wells Fargo logo Just when it seems that executives at Wells Fargo Bank have seen the light and turned the ethics corner, along comes a news report about another fraudulent program at the bank. The New York Times reported:

"More than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need, and some of them are still paying for it, according to an internal report prepared for the bank’s executives.

The expense of the unneeded insurance, which covered collision damage, pushed roughly 274,000 Wells Fargo customers into delinquency and resulted in almost 25,000 wrongful vehicle repossessions, according to the 60-page report, which was obtained by The New York Times. Among the Wells Fargo customers hurt by the practice were military service members on active duty."

The internal report, by the consulting firm Oliver Wyman, investigated auto insurance policies sold from January 2012 through July 2016. While this was happening, the bank has been recovering from a scandal where employees opened millions of phony accounts in order to game an incentive system.

Wells Fargo released a statement about how it will help affected with unwanted and unnecessary insurance, and fix its Collateral Protection Insurance (CPI) policies:

"Wells Fargo reviewed policies placed between 2012 and 2017 and identified approximately 570,000 customers who may have been impacted and will receive refunds and other payments as compensation. In total, approximately $64 million of cash remediation will be sent to customers in the coming months, along with $16 million of account adjustments, for a total of approximately $80 million in remediation... in July 2016 Wells Fargo initiated a review of the CPI program and related third-party vendor practices. Based on the initial findings, the company discontinued its CPI program in September 2016... Wells Fargo’s review determined that certain external vendor processes and internal controls were inadequate. As a result, customers may have been charged premiums for CPI even if they were paying for their own vehicle insurance, as required, and in some cases the CPI premiums may have contributed to a default that led to their vehicle’s repossession... Wells Fargo already has been providing CPI-related refunds to some customers and, beginning in August, will send letters and refund checks to customers who are due additional payments. The process is expected to be complete by the end of the year and is as follows:

i) Approximately 490,000 customers had CPI placed for some or all of the time they had adequate vehicle insurance coverage of their own... These customers will receive additional refunds of certain fees and some additional interest. Refunds for this group total approximately $25 million;

ii) In five states that have specific notification and disclosure requirements, approximately 60,000 customers did not receive complete disclosures from our vendor as required prior to CPI placement. In these cases, even if CPI was required, customers will receive a refund including premiums, fees and interest. Refunds for this group total approximately $39 million:

iii) For approximately 20,000 customers, the additional costs of the CPI could have contributed to a default that resulted in the repossession of their vehicle. Those customers will receive additional payments as compensation for the loss of their vehicle. The payment amount will depend on each customer’s situation..."

Do the math. 490,000 customers were overcharged about $25 million, or about $51 per person. 60,000 customers were overcharged $39 million or about $1,950 per person. 34 percent of borrowers (274,000 divided by 800,000) were reportedly pushed into delinquency. Substantial amounts.

Besides reimbursements, the bank said it will work with credit reporting agencies to correct affected borrowers’ credit records. That seems to be the minimum solution. Not only did the bank overcharge some customers, but it also had inadequate controls for both internal processes and external vendors. Which managers were reprimanded, or fired, for those lapses? The bank's statement didn't say. Where were the bank's auditors throughout this mess?

National General Insurance (NGI) underwrote the auto insurance policies for Wells Fargo. A lawsuit by customers named both Wells Fargo and NGI as defendants. And, at least one other law firm is investigating a possible class-action suit.

How does unwanted and unnecessary insurance help customers? Not in any way I can see. Well, it probably helped the bank's profitability for a while.

Reportedly, military service members and their families were among the affected borrowers. And, this latest program isn't the first abuse by the bank of military members and their families. Last fall, the U.S. Justice Department (DOJ) sanctioned the bank for improperly repossessing cars owned by members of the military. The DOJ alleged 413 violations of the Servicemembers Civil Relief Act, and the bank agreed to pay more than $4 million to compensate borrowers affected by seven years of unlawful repossessions.

In June, one U.S. Senator called for the firing of all 12 board members for failing to protect account holders. It seems that unethical executive behavior at the bank will stop only when guilty executives serve jail time; not fines the bank can easily afford.

The whole sordid affair makes one wonder what other programs at the bank remain hidden. What are your opinions? If you received a refund letter and check, please share what you safely can about it below.


3 Strategies To Defend GOP Health Bill: Euphemisms, False Statements and Deleted Comments

[Editor's Note: today's guest post is by the reporters as ProPublica. Affordable health care and coverage are important to many, if not most, Americans. It is reprinted with permission.]

by Charles Ornstein, ProPublica

Earlier this month, a day after the House of Representatives passed a bill to repeal and replace major parts of the Affordable Care Act, Ashleigh Morley visited her congressman's Facebook page to voice her dismay.

"Your vote yesterday was unthinkably irresponsible and does not begin to account for the thousands of constituents in your district who rely upon many of the services and provisions provided for them by the ACA," Morley wrote on the page affiliated with the campaign of Representative Peter King (Republican, New York). "You never had my vote and this confirms why."

The next day, Morley said, her comment was deleted and she was blocked from commenting on or reacting to King's posts. The same thing has happened to others critical of King's positions on health care and other matters. King has deleted negative feedback and blocked critics from his Facebook page, several of his constituents say, sharing screenshots of comments that are no longer there.

"Having my voice and opinions shut down by the person who represents me -- especially when my voice and opinion wasn't vulgar and obscene -- is frustrating, it's disheartening, and I think it points to perhaps a larger problem with our representatives and maybe their priorities," Morley said in an interview.

King's office did not respond to requests for comment.

As Republican members of Congress seek to roll back the Affordable Care Act, commonly called Obamacare, and replace it with the American Health Care Act, they have adopted various strategies to influence and cope with public opinion, which polls show mostly opposes their plan. ProPublica, with our partners at Kaiser Health News, Stat and Vox, has been fact-checking members of Congress in this debate and we've found misstatements on both sides, though more by Republicans than Democrats. The Washington Post's Fact Checker has similarly found misstatements by both sides.

Today, we're back with more examples of how legislators are interacting with constituents about repealing Obamacare, whether online or in traditional correspondence. Their more controversial tactics seem to fall into three main categories: providing incorrect information, using euphemisms for the impact of their actions, and deleting comments critical of them. (Share your correspondence with members of Congress with us.)

Incorrect Information

Representative Vicky Hartzler (Republican, Missouri) sent a note to constituents this month explaining her vote in favor of the Republican bill. First, she outlined why she believes the ACA is not sustainable -- namely, higher premiums and few choices. Then she said it was important to have a smooth transition from one system to another.

"This is why I supported the AHCA to follow through on our promise to have an immediate replacement ready to go should the ACA be repealed," she wrote. "The AHCA keeps the ACA for the next three years then phases in a new approach to give people, states, and insurance markets plenty of time to make adjustments."

Except that's not true.

"There are quite a number of changes in the AHCA that take effect within the next three years," wrote ACA expert Timothy Jost, an emeritus professor at Washington and Lee University School of Law, in an email to ProPublica.

The current law's penalties on individuals who do not purchase insurance and on employers who do not offer it would be repealed retroactively to 2016, which could remove the incentive for some employers to offer coverage to their workers. Moreover, beginning in 2018, older people could be charged premiums up to five times more than younger people -- up from three times under current law. The way in which premium tax credits would be calculated would change as well, benefiting younger people at the expense of older ones, Jost said.

"It is certainly not correct to say that everything stays the same for the next three years," he wrote.

In an email, Hartzler spokesman Casey Harper replied, "I can see how this sentence in the letter could be misconstrued. It's very important to the Congresswoman that we give clear, accurate information to her constituents. Thanks for pointing that out."

Other lawmakers have similarly shared incorrect information after voting to repeal the ACA. Representative Diane Black (Republican, Tennessee) wrote in a May 19 email to a constituent that "in 16 of our counties, there are no plans available at all. This system is crumbling before our eyes and we cannot wait another year to act."

Black was referring to the possibility that, in 16 Tennessee counties around Knoxville, there might not have been any insurance options in the ACA marketplace next year. However, 10 days earlier, before she sent her email, BlueCross BlueShield of Tennessee announced that it was willing to provide coverage in those counties and would work with the state Department of Commerce and Insurance "to set the right conditions that would allow our return."

"We stand by our statement of the facts, and Congressman Black is working hard to repeal and replace Obamacare with a system that actually works for Tennessee families and individuals," her deputy chief of staff Dean Thompson said in an email.

On the Democratic side, the Washington Post Fact Checker has called out representatives for saying the AHCA would consider rape or sexual assault as pre-existing conditions. The bill would not do that, although critics counter that any resulting mental health issues or sexually transmitted diseases could be considered existing illnesses.

Euphemisms

A number of lawmakers have posted information taken from talking points put out by the House Republican Conference that try to frame the changes in the Republican bill as kinder and gentler than most experts expect them to be.

An answer to one frequently asked question pushes back against criticism that the Republican bill would gut Medicaid, the federal-state health insurance program for the poor, and appears on the websites of Representative Garret Graves (Republican, Louisiana) and others.

"Our plan responsibly unwinds Obamacare's Medicaid expansion," the answer says. "We freeze enrollment and allow natural turnover in the Medicaid program as beneficiaries see their life circumstances change. This strategy is both fiscally responsible and fair, ensuring we don't pull the rug out on anyone while also ending the Obamacare expansion that unfairly prioritizes able-bodied working adults over the most vulnerable."

That is highly misleading, experts say.

The Affordable Care Act allowed states to expand Medicaid eligibility to anyone who earned less than 138 percent of the federal poverty level, with the federal government picking up almost the entire tab. Thirty-one states and the District of Columbia opted to do so. As a result, the program now covers more than 74 million beneficiaries, nearly 17 million more than it did at the end of 2013.

The GOP health care bill would pare that back. Beginning in 2020, it would reduce the share the federal government pays for new enrollees in the Medicaid expansion to the rate it pays for other enrollees in the state, which is considerably less. Also in 2020, the legislation would cap the spending growth rate per Medicaid beneficiary. As a result, a Congressional Budget Office review released Wednesday estimates that millions of Americans would become uninsured.

Sara Rosenbaum, a professor of health law and policy at the Milken Institute School of Public Health at George Washington University, said the GOP's characterization of its Medicaid plan is wrong on many levels. People naturally cycle on and off Medicaid, she said, often because of temporary events, not changing life circumstances -- seasonal workers, for instance, may see their wages rise in summer months before falling back.

"A terrible blow to millions of poor people is recast as an easing off of benefits that really aren't all that important, in a humane way," she said.

Moreover, the GOP bill actually would speed up the "natural turnover" in the Medicaid program, said Diane Rowland, executive vice president of the Kaiser Family Foundation, a health care think tank. Under the ACA, states were only permitted to recheck enrollees' eligibility for Medicaid once a year because cumbersome paperwork requirements have been shown to cause people to lose their coverage. The American Health Care Act would require these checks every six months -- and even give states more money to conduct them.

Rowland also took issue with the GOP talking point that the expansion "unfairly prioritizes able-bodied working adults over the most vulnerable." At a House Energy and Commerce Committee hearing earlier this year, GOP representatives maintained that the Medicaid expansion may be creating longer waits for home- and community-based programs for sick and disabled Medicaid patients needing long-term care, "putting care for some of the most vulnerable Americans at risk."

Research from the Kaiser Family Foundation, however, showed that there was no relationship between waiting lists and states that expanded Medicaid. Such waiting lists pre-dated the expansion and they were worse in states that did not expand Medicaid than in states that did.

"This is a complete misrepresentation of the facts," Rosenbaum said.

Graves' office said the information on his site came from the House Republican Conference. Emails to the conference's press office were not returned.

The GOP talking points also play up a new Patient and State Stability Fund included in the AHCA, which is intended to defray the costs of covering people with expensive health conditions. "All told, $130 billion dollars would be made available to states to finance innovative programs to address their unique patient populations," the information says. "This new stability fund ensures these programs have the necessary funding to protect patients while also giving states the ability to design insurance markets that will lower costs and increase choice."

The fund was modeled after a program in Maine, called an invisible high-risk pool, which advocates say has kept premiums in check in the state. But Senator Susan Collins (Republican, Maine) says the House bill's stability fund wasn't allocated enough money to keep premiums stable.

"In order to do the Maine model 2014 which I've heard many House people say that is what they're aiming for -- it would take $15 billion in the first year and that is not in the House bill," Collins told Politico. "There is actually $3 billion specifically designated for high-risk pools in the first year."

Deleting Comments

Morley, 28, a branded content editor who lives in Seaford, New York, said she moved into Representative King's Long Island district shortly before the 2016 election. She said she did not vote for him and, like many others across the country, said the election results galvanized her into becoming more politically active.

Earlier this year, Morley found an online conversation among King's constituents who said their critical comments were being deleted from his Facebook page. Because she doesn't agree with King's stances, she said she wanted to reserve her comment for an issue she felt strongly about.

A day after the House voted to repeal the ACA, Morley posted her thoughts. "I kind of felt that that was when I wanted to use my one comment, my one strike as it would be," she said.

By noon the next day, it had been deleted and she had been blocked.

"I even wrote in my comment that you can block me but I'm still going to call your office," Morley said in an interview.

Some negative comments about King remain on his Facebook page. But King's critics say his deletions fit a broader pattern. He has declined to hold an in-person town hall meeting this year, saying, "to me all they do is just turn into a screaming session," according to CNN. He held a telephonic town hall meeting but only answered a small fraction of the questions submitted. And he met with Liuba Grechen Shirley, the founder of a local Democratic group in his district, but only after her group held a protest in front of his office that drew around 400 people.

"He's not losing his health care," Grechen Shirley said. "It doesn't affect him. It's a death sentence for many and he doesn't even care enough to meet with his constituents."

King's deleted comments even caught the eye of Andy Slavitt, who until January was the acting administrator of the Centers for Medicare and Medicaid Services. Slavitt has been traveling the country pushing back against attempts to gut the ACA.

.@RepPeteKing, are you silencing your constituents who send you questions? Assume ppl in district will respond if this is happening.

-- Andy Slavitt (@ASlavitt) May 12, 2017

Since the election, other activists across the country who oppose the president's agenda have posted online that they have been blocked from following their elected officials on Twitter or commenting on their Facebook pages because of critical statements they've made about the AHCA and other issues.

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for their newsletter.


We Fact-Checked Lawmakers' Letters To Constituents on Health Care

[Editor's Note: today's guest post, by the reporters at ProPublica, explores the problem of "fake news" and whether elected officials contribute to the problem while discussing health care legislation. The article was originally published yesterday, and is reprinted with permission. Interested persons wanting to help ProPublica's ongoing fact-checking efforts can share with ProPublica messages you have received from your elected officials.]

by Charles Ornstein, ProPublica

When Louisiana resident Andrea Mongler wrote to her senator, Bill Cassidy, in support of the Affordable Care Act, she wasn't surprised to get an email back detailing the law's faults. Cassidy, a Republican who is also a physician, has been a vocal critic.

"Obamacare" he wrote in January, "does not lower costs or improve quality, but rather it raises taxes and allows a presidentially handpicked 'Health Choices Commissioner' to determine what coverage and treatments are available to you."

There's one problem with Cassidy's ominous-sounding assertion: It's false.

The Affordable Care Act, commonly called Obamacare, includes no "Health Choices Commissioner." Another bill introduced in Congress in 2009 did include such a position, but the bill died 2014 and besides, the job as outlined in that legislation didn't have the powers Cassidy ascribed to it.

As the debate to repeal the law heats up in Congress, constituents are flooding their representatives with notes of support or concern, and the lawmakers are responding, sometimes with form letters that are misleading. A review of more than 200 such letters by ProPublica and its partners at Kaiser Health News, Stat and Vox, found dozens of errors and mis-characterizations about the ACA and its proposed replacement. The legislators have cited wrong statistics, conflated health care terms and made statements that don't stand up to verification.

It's not clear if this is intentional or if the lawmakers and their staffs don't understand the current law or the proposals to alter it. Either way, the issue of what is wrong -- and right -- about the current system has become critical as the House prepares to vote on the GOP's replacement bill today.

"If you get something like that in writing from your U.S. senator, you should be able to just believe that," said Mongler, 34, a freelance writer and editor who is pursuing a master's degree in public health. "I hate that people are being fed falsehoods, and a lot of people are buying it and not questioning it. It's far beyond politics as usual."

Cassidy's staff did not respond to questions about his letter.

Political debates about complex policy issues are prone to hyperbole and health care is no exception. And to be sure, many of the assertions in the lawmakers' letters are at least partially based in fact.

Democrats, for instance, have been emphasizing to their constituents that millions of previously uninsured people now have medical coverage thanks to the law. They say insurance companies can no longer discriminate against millions of patients with pre-existing conditions. And they credit the law with allowing adults under age 26 to stay on their parents' health plans. All true.

For their part, Republicans criticize the law for not living up to its promises. They say former President Obama pledged that people could keep their health plans and doctors and premiums would go down. Neither has happened. They also say that insurers are dropping out of the market and that monthly premiums and deductibles (the amount people must pay before their coverage kicks in) have gone up. All true.

But elected officials in both parties have incorrectly cited statistics and left out important context. We decided to take a closer look after finding misleading statements in an email Senator Roy Blunt (R-Missouri) sent to his constituents. We solicited letters from the public and found a wealth of misinformation, from statements that were simply misleading to whoppers. More Republicans fudged than Democrats, though both had their moments.

An aide to Rep. Dana Rohrabacher (R-California) defended his hyperbole as "within the range of respected interpretations."

"Do most people pay that much attention to what their congressman says? Probably not," said Sherry Glied, dean of New York University's Robert F. Wagner Graduate School of Public Service, who served as an assistant Health and Human Services secretary from 2010 to 2012. "But I think misinformation or inaccurate information is a bad thing and not knowing what you're voting on is a really bad thing."

We reviewed the emails and letters sent by 51 senators and 134 members of the House within the past few months. Here are some of the most glaring errors and omissions:

Rep. Pat Tiberi (R-Ohio) incorrectly cited the number of Ohio counties that had only one insurer on the Affordable Care Act insurance exchange.

What he wrote: "In Ohio, almost one third of counties will have only one insurer participating in the exchange."

What's misleading: In fact, only 23 percent (less than one quarter) had only one option, according to an analysis by the Kaiser Family Foundation.

His response: A Tiberi spokesperson defended the statement. "The letter says 'almost' because only 9 more counties in Ohio need to start offering only 1 plan on the exchanges to be one third."

Why his response is misleading: Ohio has 88 counties. A 10 percent difference is not "almost."

Representative Kevin Yoder (R-Kansas) said that the quality of health care in the country has declined because of the ACA, offering no proof.

What he wrote: "Quality of care has decreased as doctors have been burdened with increased regulations on their profession."

Why it's misleading: Some data shows that health care has improved after the passage of the ACA. Patients are less likely to be readmitted to a hospital within 30 days after they have been discharged, for instance. Also, payments have been increasingly linked to patients' outcomes rather than just the quantity of services delivered. A 2016 report by the Commonwealth Fund, a health care nonprofit think tank, found that the quality care has improved in many communities following the ACA.

His response: None.

Representative Anna Eshoo (D-California) misstated the percentage of Medicaid spending that covers the cost of long-term care, such as nursing home stays.

What she wrote: "It's important to note that 60 percent of Medicaid goes to long-term care and with the evisceration of it in the bill, this critical coverage is severely compromised."

What's misleading: Medicaid does not spend 60 percent of its budget on long-term care. The figure is closer to a quarter, according to the Center on Budget and Policy Priorities, a liberal think tank. Medicaid does, however, cover more than 60 percent of all nursing home residents.

Her response: Eshoo's office said the statistic was based on a subset of enrollees who are dually enrolled in Medicaid and Medicare. For this smaller group, 62 percent of Medicaid expenditures were for long-term support services, according to the Kaiser Family Foundation.

What's misleading about the response: Eshoo's letter makes no reference to this population, but instead refers to the 75 million Americans on Medicaid.

Representative Chuck Fleischmann (R-Tennessee) pointed to the number of uninsured Americans as a failure of the ACA, without noting that the law had dramatically reduced the number of uninsured.

What he wrote: "According to the U.S. Census Bureau, approximately thirty-three million Americans are still living without health care coverage and many more have coverage that does not adequately meet their health care needs."

Why it's misleading: The actual number of uninsured in 2015 was about 29 million, a drop of 4 million from the prior year, the Census Bureau reported in September. Fleischmann's number was from the previous year.

Beyond that, reducing the number of uninsured by more than 12 million people from 2013 to 2015 has been seen as a success of Obamacare. And the Republican repeal-and-replace bill is projected to increase the number of uninsured.

His response: None.

Rep. Joseph P. Kennedy III (D-Massachusetts) overstated the number of young adults who were able to stay on their parents' health plan as a result of the law.

What he wrote: The ACA "allowed 6.1 million young adults to remain covered by their parents' insurance plans."

What's misleading: A 2016 report by the U.S. Department of Health and Human Services, released during the Obama administration, however, pegged the number at 2.3 million.

Kennedy may have gotten to 6.1 million by including 3.8 million young adults who gained health insurance coverage through insurance marketplaces from October 2013 through early 2016.

His response: A spokeswoman for Kennedy said the office had indeed added those two numbers together and would fix future letters.

Representative Blaine Luetkemeyer (R-Missouri.) said that 75 percent of health insurance marketplaces run by states have failed. They have not.

What he said: "Nearly 75 percent of state-run exchanges have already collapsed, forcing more than 800,000 Americans to find new coverage."

What's misleading: When the ACA first launched, 16 states and the District of Columbia opted to set up their own exchanges for residents to purchase insurance, instead of using the federal marketplace, known as Healthcare.gov.

Of the 16, four state exchanges, in Oregon, Hawaii, New Mexico and Nevada, failed, and Kentucky plans to close its exchange this year, according to a report by the House Energy and Commerce Committee. While the report casts doubt on the viability of other state exchanges, it is clear that 3/4 have not failed.

His response: None.

Representative Dana Rohrabacher (R-California) overstated that the ACA "distorted labor markets," prompting employers to shift workers from full-time jobs to part-time jobs.

What he said: "It has also, through the requirement that employees that work thirty hours or more be considered full time and thus be offered health insurance by their employer, distorted the labor market."

What's misleading: A number of studies have found little to back up that assertion. A 2016 study published by the journal Health Affairs examined data on hours worked, reason for working part time, age, education and health insurance status. "We found only limited evidence to support this speculation" that the law led to an increase in part-time employment, the authors wrote. Another study found much the same.

In addition, PolitiFact labeled as false a statement last June by President Donald Trump in which he said, "Because of Obamacare, you have so many part-time jobs."

His response: Rohrabacher spokesman Ken Grubbs said the congressman's statement was based on an article that said, "Are Republicans right that employers are capping workers' hours to avoid offering health insurance? The evidence suggests the answer is 'yes,' although the number of workers affected is fairly small."

We pointed out that "fairly small" was hardly akin to distorting the labor market. To which Grubbs replied, "The congressman's letter is well within the range of respected interpretations. That employers would react to Obamacare's impact in such way is so obvious, so nearly axiomatic, that it is pointless to get lost in the weeds," Grubbs said.

Representative Mike Bishop (R-Michigan) appears to have cited a speculative 2013 report by a GOP-led House committee as evidence of current and future premium increases under the ACA.

What he wrote: "Health insurance premiums are slated to increase significantly. Existing customers can expect an average increase of 73 percent, while the average change due to Obamacare for those purchasing a new plan will be a 96 percent increase in premiums. The average cost for a new customer in the individual market is expected to rise $1,812 per year."

What's misleading: The figures seem to have come from a report issued before the Obamacare insurance marketplaces launched and before 2014 premiums had been announced. The letter implies these figures are current. In fact, premium increases by and large have been moderate under Obamacare. The average monthly premium for a benchmark plan, upon which federal subsidies are calculated, increased about 2 percent from 2014 to 2015; 7 percent from 2015 to 2016; and 25 percent this year, for states that take part in the federal insurance marketplace.

His response: None

Representative Dan Newhouse (R-Washington) misstated the reasons why Medicaid costs per person were higher than expected in 2015.

What he wrote: "A Medicaid actuarial report from August 2016 found that the average cost per enrollee was 49 percent higher than estimated just a year prior 2014 in large part due to beneficiaries seeking care at more expensive hospital emergency rooms due to difficulty finding a doctor and long waits for appointments."

What's misleading: The report did not blame the higher costs on the difficulty patients had finding doctors. Among the reasons the report did cite: patients who were sicker than anticipated and required a raft of services after being previously uninsured. The report also noted that costs are expected to decrease in the future.

His response: None

Senator Dick Durbin (D-Ill.) wrongly stated that family premiums are declining under Obamacare.

What he wrote: "Families are seeing lower premiums on their insurance, seniors are saving money on prescription drug costs, and hospital readmission rates are dropping."

What's misleading: Durbin's second and third points are true. The first, however, is misleading. Family insurance premiums have increased in recent years, although with government subsidies, some low- and middle-income families may be paying less for their health coverage than they once did.

His response: Durbin's office said it based its statement on an analysis published in the journal Health Affairs that said that individual health insurance premiums dropped between 2013 and 2014, the year that Obamacare insurance marketplaces began. It also pointed to a Washington Post opinion piece that said that premiums under the law are lower than they would have been without the law.

Why his response is misleading: The Post piece his office cites states clearly, "Yes, insurance premiums are going up, both in the health care exchanges and in the employer-based insurance market."

Representative Susan Brooks (R-Ind.) told constituents that premiums nationwide were slated to jump from 2016 to 2017, but failed to mention that premiums for some plans in her home state actually decreased.

What she wrote: "Since the enactment of the ACA, deductibles are up, on average, 63 percent. To make matters worse, monthly premiums for the "bronze plan" rose 21 percent from 2016 to 2017. 2026 Families and individuals covered through their employer are forced to make the difficult choice: pay their premium each month or pay their bills."

What's misleading: Brooks accurately cited national data from the website HealthPocket, but her statement is misleading. Indiana was one of two states in which the premium for a benchmark health plan -- the plan used to calculate federal subsidies -- actually went down between 2016 and 2017. Moreover, more than 80 percent of marketplace consumers in Indiana receive subsidies that lowered their premium costs. The HealthPocket figures refer to people who do not qualify for those subsidies.

Her response: Brooks' office referred to a press release from Indiana's Department of Insurance, which took issue with an Indianapolis Star story about premiums going down. The release, from October, when Vice President Mike Pence was Indiana's governor, said that the average premiums would go up more than 18 percent over 2016 rates based on enrollment at that time. In addition, the release noted, 68,000 Indiana residents lost their health plans when their insurers withdrew from the market.

Why her response is misleading: For Indiana consumers who shopped around, which many did, there was an opportunity to find a cheaper plan.

Senator Ron Wyden (D-Ore.) incorrectly said that the Republican bill to repeal Obamacare would cut funding for seniors in nursing homes.

What he wrote: "It's terrible for seniors. Trumpcare forces older Americans to pay 5 times the amount younger Americans will -- an age tax -- and slashes Medicaid benefits for nursing home care that two out of three Americans in nursing homes rely on."

What's misleading: Wyden is correct that the GOP bill, known as the American Health Care Act, would allow insurance companies to charge older adults five times higher premiums than younger ones, compared to three times higher premiums under the existing law. However, it does not directly slash Medicaid benefits for nursing home residents. It proposes cutting Medicaid funding and giving states a greater say in setting their own priorities. States may, as a result, end up cutting services, jeopardizing nursing home care for poor seniors, advocates say, because it is one of the most expensive parts of the program.

His response: Taylor Harvey, a spokesman for Wyden, defended the statement, noting that the GOP health bill cuts Medicaid funding by $880 billion over 10 years and places a cap on spending. "Cuts to Medicaid would force states to nickel and dime nursing homes, restricting access to care for older Americans and making it a benefit in name only," he wrote.

Why his response is misleading: The GOP bill does not spell out how states make such cuts.

Representative Derek Kilmer (D-Washington) misleadingly said premiums would rise under the Obamacare replacement bill now being considered by the House.

What he wrote: "It's about the 24 million Americans expected to lose their insurance under the Trumpcare plan and for every person who will see their insurance premiums rise 2014 on average 10-15 percent."

Why it's misleading: First, the Congressional Budget Office did estimate that the GOP legislation would cover 24 million fewer Americans by 2026. But not all of those people would "lose their insurance." Some would choose to drop coverage because the bill would no longer make it mandatory to have health insurance, as is the case now.

Second, the budget office did say that in 2018 and 2019, premiums under the GOP bill would be 15-20 percent higher than they would have been under Obamacare because the share of unhealthy patients would increase as some of those who are healthy drop out. But it noted that after that, premiums would be lower than under the ACA.

His response: None.

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The Boston Keep ACA Rally on January 15 And Senator Warren's Remarks

Crowd gathering an hour before Boston healthcare rally. January 15,, 2017. click to view larger version On Sunday January 15, 2017 I attended the healthcare rally in Boston at iconic Faneuil Hall. It was one of a dozen rallies around the United States. Several people spoke, including Boston Mayor Marty Walsh, U.S. Senator Elizabeth Warren, activist Sarah Grow, Carla Leviano, and U.S. Senator Edward Markey. The attendance was great and far exceeded the capacity for the auditorium inside Faneuil Hall, where it was originally planned.

The event continued outside with what I estimated at least five thousand people standing in the cold 27 degrees Fahrenheit temperature. This blog post contains several photographs I took. The photo on the right shows the crowd gather more than hour before the official 1:00 pm start of the rally.

Carla Lievano, a single-mother whose family is on MassHealth, is worried about losing her health benefits if the Affordable Care Act is repealed. She said:

"I could lose my health benefits... I’m very low income. I don’t know how I would take care of [my daughter]..."

Senator Warren speaking at January 15, 2017 healthcare rally in Boston. Click to view larger version Grow shared the story of her mother's battle against cancer, and how the Affordable Care Act (ACA and a//k/a Obamacare) saved her mother's life. Her mother was able to find a replacement plan under the ACA. Below is the transcript of Senator Elizabeth Warren's remarks (courtesy of the Boston Globe):

"For eight years, Republicans in Congress have complained about health care in America, heaping most of the blame on President Obama. Meanwhile, they’ve hung out on the sidelines making doomsday predictions and cheering every stumble, but refusing to lift a finger to actually improve our health care system.

The GOP is about to control the White House, Senate, and House. So what’s the first thing on their agenda? Are they working to bring down premiums and deductibles? Are they making fixes to expand the network of doctors and the number of plans people can choose from? Nope. The number one priority for congressional Republicans is repealing the Affordable Care Act and breaking up our health care system while offering zero solutions.

Their strategy? Repeal and run.

Many Massachusetts families are watching this play out, worried about what will happen — including thousands from across the Commonwealth that I joined at Faneuil Hall on Sunday to rally in support of the ACA. Hospitals and insurers are watching too, concerned that repealing the ACA will create chaos in the health insurance market and send costs spiraling out of control.

Health care reform in Massachusetts wasn’t partisan. Democrats, Republicans, business leaders, hospitals, insurers, doctors, and consumers all came together behind a commitment that every single person in our Commonwealth deserves access to affordable, high-quality care. When Republican Governor Mitt Romney signed Massachusetts health reform into law in 2006, our state took huge strides toward offering universal health care coverage and financial security to millions of Bay State residents.

That law was a major step forward. Today, more than 97 percent of Bay Staters are covered — the highest rate of any state in the country.

But Massachusetts still has a lot to lose if the ACA is repealed. One big reason for our state’s health care success is that we took advantage of the new opportunities offered under the ACA. In addition to making care more accessible and efficient, our state expanded Medicaid, using federal funds to help even more people. And we combined federal and state dollars to help reduce the cost of insurance on the Health Connector.

When the ACA passed, Massachusetts already had in place some of the best consumer protections in the nation. But the ACA still made a big difference. It strengthened protections for people in Massachusetts with pre-existing conditions, allowed for free preventive care visits, and — for the first time in our state — banned setting lifetime caps on benefits.

If the ACA is repealed, our health care system would hang in the balance. Half a million people in the Commonwealth would risk losing their coverage. People who now have an iron-clad guarantee that they can’t be turned away due to their pre-existing conditions or discriminated against because of their gender could lose that security. Preventive health care, community health centers, and rural hospitals could lose crucial support. In short, the Massachusetts health care law is a big achievement and a national model, but it also depends on the ACA and a strong partnership with the federal government.

If the cost-sharing subsidies provided by the ACA are slashed to zero, Massachusetts will have a tough time keeping down the cost of plans on the Health Connector. The state can’t make funds appear out of thin air to help families on the Medicaid expansion if Republicans yank away support. And our ability to address the opioid crisis will be severely hampered if people lose access to health insurance or if the federal funding provided through the Medicaid waiver disappears. Even in states with strong health care systems — states like Massachusetts — the ACA is critical.

The current system isn’t perfect — not by a long shot. There are important steps Congress could take to lower deductibles and premiums, to expand the network of doctors people can see on their plans, and to increase the stability and predictability of the market. We should be working together to make health care better all across the country, just like we’ve tried to do here in Massachusetts.

This doesn’t need to be a partisan fight. But if congressional Republicans continue to pursue repeal of the ACA with nothing more than vague assurances that they might — someday — think up a replacement plan, the millions of Americans who believe in guaranteeing people’s access to affordable health care will fight back every step of the way.

Repeal and run is for cowards."

Want to read more? Try these hashtags on social networking sites: #repealandrun #ourfirststand #savehealthcare #CareNotChaos. Below are more photos from Sunday's event in Boston.

Protester sign at Boston healthcare rally
Protester sign. Boston healthcare rally. 1/15/17

Protester sign at Boston healthcare rally
Protester sign at Boston healthcare rally. 1/15/17

Boston Mayor Marty Walsh speaking at healthcare rally January 15, 2017
Mayor Marty Walsh speaking at healthcare rally. 1/15/17

View of crowd at Boston healthcare rally January 15, 2017
View from crowd at Boston healthcare rally. 1/15/17


Survey: Bankers Expect Consumers To Use Wearable And Smart Home Devices For Banking

Pegasystems logo Would you use a smart watch, fitness band, or other wearable device for banking? How about your smart television or refrigerator? Many bankers think you will, and are racing to integrate a broader range of mobile devices and technologies into their banking services. A recent survey of financial executives found that:

"... 20 per cent expect it to be common for consumers to make financial transactions using wearables within one year, 59 per cent within two years and 91 per cent within five years... 87 per cent expect it to be common for consumers to make financial transactions using Smart TVs and 68 per cent via home appliances."

The survey included 500 executives globally in several financial areas: banking, financial advice, consumer finance, investment management, insurance, and payments. So, consumers are likely to see these changes not just at your bank, but in a variety of financial and insurance transactions. Here's why:

"... too many banks are out of touch with what customers really want: one survey found 62 per cent of retail banking executives believed their bank offered excellent service compared to just 35 per cent of customers.... Millennials will have annual spending power of US$1. trillion [in 2020] and represent 30 per cent of total retail sales... Millennials not only have an appetite for disruptive new technologies but also an affinity with brand-savvy digital leaders... The Millennial Disruption Index, a three-year study of industry disruption conducted by Viacom subsidiary Scratch, found that banking was most vulnerable to disruption..."

The report discussed the desire by executives to serve customers via a variety of methods:

"Today’s customers expect a flawless end-to-end experience across all channels, yet fewer than 4 per cent of our respondents say they have achieved full omni-channel integration... by 2020, 89 per cent of our respondents expect to achieve full omni-channel integration. This either suggests a massive surge of investment over the next five years – or an industry in denial about the scale of the task ahead... 70 per cent expect video chat to largely replace branch appointments. Indeed, six out of ten now believe a digital-only channel model is viable."

Bankers view the Internet-of-Things (IoT) as both a collection of endpoint devices to provide services through, and a rich source of data:

"...93 per cent agree that finding innovative ways to provide value-added services to customers based on data-driven insight will be crucial to long-term success... 86 per cent agree that once consumers recognize the data potential of the IoT they will increasingly seek to benchmark their own behavior against their peers..."

Banks will probably develop more non-human (e.g., self-service) interfaces:

"... 76 per cent agree the widespread use of virtual assistants such as Siri on the iPhone means customers are more willing to engage with automated assistance and advice... almost three quarters of our respondents agree that in the future customers will interact with a human-like avatar..."

Another technology being considered:

"... 60 per cent [of survey respondents] believe that blockchain, a distributed public ledger which can securely record any information and the ownership of any asset, will prove to be the most significant technology development to affect financial services since the Internet and 45 per cent think the combination of blockchain wallets and peerto-peer (P2P) lending could herald the end of banking as we know it... 12 per cent expect the settlement of insurance claims using IoT data, blockchain and smart contracts to be mainstream practice within two years and 74 per cent expect it to be mainstream by 2025..."

Don't expect your bank to provide these new services next week or next month. It will take them time. New systems must be built, tested, debugged, and integrated with legacy computer systems and processes. All of this suggests that to fund their investments in innovation projects, banks probably won't lower their retail banking prices and fees (e.g., checking, savings, etc.) any time soon. While writing this blog the past 8+ years, I've found it wise to always keep an eye on the banks.

Download "The Future of Retail Financial Services" report by Cognizant, Marketforce, and Pegasystems.


Police Officer Charged with Insurance Fraud

[Editor's Note: I am happy to feature a post by guest author Arkady Bukh. He leads the law firm of Bukh & Associates, PLLC which specializes in criminal law, family law, and several areas of civil law. He is a frequent contributor on CNN, Wired, Forbes, Huffington Post, and several other sites. Today's post is about insurance fraud.]

By Arkady Bukh, Esq.

Occasionally, insurance claims are more fiction that reality.

Adjusters know that not every case is as it seems. Some are complex and others bizarre — if not downright creative. Sometimes it appears that the protected have no remorse when it comes to submitting claims that no sane and rational person would think about.

Insurance fraud claims probably require the greatest ingenuity. According to the Insurance Information Institute, fraud losses are over $30 billion a year. Add-on costs for health care fraud, $77 billion to $359 billion, and the damages add up quickly.

Insurance fraud falls into two types: hard and soft.

Hard fraud typically means someone deliberately creates a bogus claim application. Soft fraud is more of a crime of chance — padding a legitimate claim, changing a home location so that the insurance premiums are lower — that sort of thing.

Regardless if it’s hard or soft fraud, it’s all illegal and accounts for 5% to 20% of insurers’ claims costs.

The good news is that roughly 95% of insurers use antifraud technology that makes it easier to catch the crooks.

The best technology though doesn't stop some individuals from filing claims that shouldn’t have been filed.

Sometimes though the crooks’ stupidity trips them up. Here are two examples:

The Golfer

In a discussion on Quora.com, the online Q&A forum, one case of insurance fraud stands out.

An executive for a publicly traded corporation was big on golfing. As most serious amateurs, he was also big on the new clubs and all the gadgetry that golfers like to purchase.

The executive filed a multi-million dollar lawsuit for disability, claiming that he had fallen and hurt his back while on a business trip out of town.

Several private investigator firms, hired by our fraudster’s employer, were unable to gather information to disprove the disability claim.

Then, a creative Private Investigator came along and figured he could trap the alleged swindler using his love of golf against him.

Running a fake ad in the local newspaper, the PI announced that a new golf club manufacturer was opening up and would be giving away brand-new sets of clubs in exchange for a testimonial.

The VP saw the ad, made the call, and the PI came to the suspect’s house to measure him for his new clubs.

There was just one catch. The PI wanted to take some photographs of the VP using the clubs to go along with the testimonial.

The VP obliged, swung the clubs while the PI snapped away, and the rest of the story can be figured out quickly enough.

The Cop

Perpetrators of workers’ compensation fraud can be found in any job. Law enforcement officers aren’t immune.

Jaime Robinson, a veteran Pasadena police officer, found her undoing during the 2014 craze — ALS’s Ice Bucket Challenge.

Robinson was away from work on a disability claim when someone with a camera captured her on video showing her pouring a bucket of ice water on a fellow cop.

The five-gallon bucket, weighing in at 42 pounds, wasn’t too much for her to lift despite receiving over $116,000 for the past year in disability payments.

Charged with four counts of insurance fraud, Robinson faces a maximum of six years and four months in prison if she’s convicted.


Fraudulent Insurance Claims Affect Mobile Device Users

The Best Techie blog published a very interesting post about how easy it is for criminals to file fraudulent insurance claims for mobile devices. The problem isn't just the ease that the fraud is committed, but also that consumers probably aren't aware of fraud claims submitted against their accounts until they file a valid insurance claim:

"If you use one of the major carriers in the U.S. such as AT&T, Verizon, T-Mobile, and/or Sprint the insurance you buy comes from a company called Asurion Insurance Services, Inc... : it appears Asurion’s claim system is very easy to defraud... The only real deterrent in the claim system is that you need to sign an affidavit and provide a photo ID but if high school students can get fake IDs, I’d imagine for a fraudster obtaining a fake ID to scan is laughably easy..."

The I've Been Mugged blog has reported about Asurion. When evaluating mobile insurance offers, it is wise for consumers to do the math first. You'll want to decide if you want malware protection, and if the one- or two-year total of monthly insurance premiums exceeds the cost of your mobile device.

According to the Best Techie report, the fraudster used a combination of the victim's name and valid phone number with a different residential address. You'd think that Asurion would have easily spotted that and contacted their customer at their current address to confirm the claim and the new address.

Consumers pay good money for mobile device insurance, and deserve better protection against insurance fraud. What are your opinions?


Considering A Cruise Ship Vacation? What Consumers Need To Know

It's the middle of Winter, and you are probably tired of the cold, the snow, or both. At this time of year, many people consider warm weather vacations.Last week, a friend asked about cruise ship vacations:

"Do you have a travel agent you use for cruises? A group of us who are turning 60 this year are thinking of taking a cruise to celebrate. Maybe a repositioning cruise. Are there suites for 5 people? Any advice is most welcome."

Cruise ship vacations are popular. A cruise is a good way to sample several destination ports, and return to the ports you like for a longer, land-based visit. You can board a cruise ship near where you live, or sail from a popular travel destination.

According to the industry group Cruise Lines International Association (CLIA), about 20 million consumers went on cruise ship vacations globally during 2012.There are about 60 cruise lines with 400 total ships. The industry generated about 356,000 jobs paying $17.4 billion in wages to American workers.

It's not just more people cruising. Experienced cruise customers also book cruise itineraries with longer durations. The CLIA surveyed travel agents and 37 percent reported an increase in books of longer cruises (e.g., 14 to 100 days duration). If you have the time and money, several cruise lines offer itineraries of 30 days or longer.

I was happy to answer my friend's questions. Nobody wants to overpay or have their wallet "mugged" during a vacation. My wife and I have sailed on 22 cruise ship vacations to many parts of the world. For several years, i ran a cruise group of interracial couples and families. At a major creative advertising agency, I worked on web projects for a cruise line client. Interesting publications include the book, "Devils On The Deep Blue Sea," a history of the cruise industry, and industry magazines such as Porthole and Cruise Travel. So, I know the industry well and feel pretty qualified to give advice and answer my friend's questions.

1. Your interests. Decide what type of vacation you and your group like. Some people like as much beach time as possible. Others like golf. Others like Eco-tours. Others like active sports, such as hiking, bicycling, surfing, snorkeling, and scuba diving. Some like motorized excursions including off-road vehicles. Pick a cruise line and itinerary that fits your interests. Royal Caribbean focuses upon active sports.

2. Themed cruises. If you group has a specific interest, there is often an itinerary for that. So you can find singles cruises, NASCAR cruises, cruises for nudists, gay/lesbian cruises, and so forth. Carnival has the best night clubs and discos. It also has the best Las Vegas style shows. Celebrity Cruises is known for having the best food. Disney focuses upon families with children. All ships in Royal Caribbean's fleet feature rock-climbing walls. Some include specialize pools you can surf in. A good place to start looking for theme cruises is www.cruisecritic.com. Other places to look include Cruise Addicts and Cruise 411.

3. Cruise lines. Just like land-based hotels, there are entry/discount, mid-range, and luxury cruise lines. Entry/discount: Carnival, Royal Caribbean, Disney, Costa, and Norwegian. Mid-range: Holland America, Princess, Celebrity, and MSC. Luxury: Crystal, Cunard, Seabourn, Silversea, Windstar, Viking, and Avalon. The entry/discount cruise lines focus upon people under 40. The mid-range cruise lines focus on people 55+. The luxury cruise lines tend to have smaller ships with 150 or 200 passengers. The entry/discount cruise lines tend to have larger ships, with as many as four or five thousand passengers.

The primary language spoken varies by cruise line. For example, when we sailed on Costa and MSC in the Mediterranean, we noticed that the primary language spoken on board was Italian. We do not speak Italian and felt we had a poor experience on board these two cruise lines.

4. River or ocean cruises? My friend and her group seemed interested in ocean cruises. There are also river cruises. The two types are ENTIRELY different. Rive cruises are all about the shore excursions: you get off the ship every day, Usually, the shore excursions and tips are included in one cruise price. Viking River Cruises and Avalon Waterways focus on river cruises. Some destination ports are only acessible via river cruises.

5. Departure ports. When selecting an itinerary, some people start with the departure port because that is often a city you may want to explore its land-based attractions, restaurants, and sights. Then, you can get good and juiced before you board the cruise ship. When traveling in Winter, it is always wise to arrive at the departure city 2 days before the ship sails, in case your flight is delayed by bad weather. Departure ports we have sailed from: Amsterdam, Boston, Ft. Lauderdale, Honolulu, Los Angeles, Miami, New Orleans, San Juan (Puerto Rico), Seattle, and Venice (Italy).

6. How the industry works: pay their minimum deposit. Buy travel insurance at that time, too. The full amount is typically due 90 days before the ship sails. You will probably set up an account through the cruise line’s website to indicate in your profiles any preferences (e.g., non smoking, diets, physical limitations, etc.). After you have paid for your cruise, then you can select (and pay for) the optional shore excursions in each destination port.

Similar to airlines, all of the major cruise lines have rewards programs for frequent travels. Some consumers book travel with a single cruise line to generate as many rewards points as quickly as possible. Some pick itineraries based upon where they want to go, and then look for cruise lines sailing there.

Some consumers wait until the last minute and book whatever empty cabins are available. This is a good strategy for consumers (e.g., retirees) with flexible schedules who can travel on a moment's notice. It's a good way to get a cabin cheap, but you may not get the cabin location you want on a ship. This strategy works well if you live reasonably close to the departure port. If not, what you saved on a low-priced cruise may be eaten up by higher, last-minute, air fares.

7. Selecting your cabin: there is no single correct way. After selecting a ship or itinerary, some people select a cabin type: inside, outside, balcony, suite. Others pick a specific cabin on a ship they already know. All of the cruise lines have websites that present deck plans. My advice: no matter what type of cabin, you do NOT want a cabin underneath the disco, dining room, or lido deck pool... unless you like hearing footsteps overhead.

8. Use a travel agent? Some in your group will likely ask: are travel agents necessary? While you can do it all yourself and book your cruise through a cruise line’s website, you may want more service or have questions. Travel agents are there to answer your questions. They can give you the kinds of advice I mentioned above, recommend hotels in departure cities, often get you a lower price than the cruise line’s website, and book all elements of your vacation: the cruise, hotels, air travel, and transfers between airports, hotels, and cruise ship terminals. Whenever we work with a travel agent, we have in mind a budget and the probable retail price for the itinerary we want. We use a travel agent located nearby, so we can visit their office.

9. Read cruise reviews. Once you've selected 3 or 4 itineraries and ships, then it makes sense to read cruise reviews about the ships or itineraries you are considering. Many passengers write and post online their reviews. This is a good way to learn about the advantages and disadvantages of a ship or itinerary. A good place to read passenger-written cruise reviews is the Community section at the Cruise Critic site. Select the cruise line and then the cruise ship you are interested in.

As I said above, my wife and I have sailed on 22 cruises; both ocean and river cruises; and to most parts of the world: Mediterranean, Alaska, Hawaii, Bermuda, Panama Canal, the Caribbean, and northern South America. We have sailed on almost all of the above entry and mid-range cruise lines. We’ve only sailed on one of the luxury cruise lines.

Learn more: 8 tips about cruise ship vacations.

My friend really appreciated this detailed reply. If you have sailed on cruise ship vacations, what are your favorite itineraries? Your favorite destinations? Favorite ships? Any advice you have for new cruisers?


What Data Does Your Web Browser Collect About You?

While many people use mobile apps, most people use web browsers to access the Internet. Last week, Mozilla released a new version of its popular Firefox browser. If you use this browser and haven't reviewed some of its newer features, you probably should. The web browser software contains several options that collect data about how you use the Interenet, and then transmits this information back to the developers at Mozilla.

To view these options, open the Firefox browser on your computer and open the Tools drop-down menu. Then, select Options, then Data Choices. You'll see:

  • Telemetry
  • Firefox Health Report
  • Crash Reporter

What are these options? What data do they collect? First, Firefox defines Telemetry as:

"Usage statistics or "Telemetry" is a feature in Firefox that sends Mozilla usage, performance, and responsiveness statistics about user interface features, memory and hardware configuration. Your IP address is also collected as a part of a standard web log. Usage statistics are transmitted using SSL and help us improve future versions of Firefox. Once sent to Mozilla, usage statistics are aggregated and made available to a broad range of developers, including both Mozilla employees and public contributors. This feature is turned on by default in Nightly, Developer Edition, Aurora and Beta builds of Firefox to help those users provide feedback to Mozilla. In the general release version of Firefox, this feature is turned off by default."

Are you comfortable with your browser collecting and transmiting this data? That's your choice. The default for this option is off, so you have to opt-in or enable it. To enable it, click the check box next to Telemetry in the pop-up Options box.

The second option is the Firefox Health Report:

"Firefox Health Report (FHR) is designed to provide you with insights about your browser's stability and performance and with support tips should you experience issues, such as high crash rates or slow startup times. Mozilla collects and aggregates your data with that of other Firefox users and sends it back to your browser so you can see how your Firefox performance changes over time. This data includes, for example: device hardware, operating system, Firefox version, add-ons (count and type), timing of browser events, rendering, session restores, length of session, how old a profile is, count of crashes, and count of pages. FHR does not send Mozilla URLs that you visit. We use the data sent through FHR to provide users with FHR's functionality, such as helping you analyze and address performance issues with your browser..."

Anytime I see the phrase, "includes, for example" that tells me the option collects and transmits more data elements than those listed above. Why didn't Mozilla provide the entire list of data elements? Not doing so forces users to hunt for the complete list.

The third option is the Crash Reporter:

"This report contains technical information for us to improve Firefox including why Firefox crashed, the active URL at time of crash, and the state of computer memory during the crash. The crash report we receive may include personal information. We make portions of crash reports available publicly at https://crash-stats.mozilla.com/). Before publicly posting crash reports, we take steps to automatically redact personal information. We do not redact anything you may write in the comments box."

Maybe your Firefox browser is stable, or not. Mine is pretty stable. It rarely crashes. I have a hard time remembering the last time it crashed... probably four or five years ago. The default for this option is already enabled, so you have to opt out or remove the check box next to the Crash Reporter option.

To me, this crash data seems worthwhile, so I left the Crash Reporter opinion enabled. The other two options didn't seem critical, so I decided not to enabled them. My point: wise Internet users know what data their web browsers collect.

I like that Mozilla provided these options with their web browser. I feel informed and in control of my personal information and privacy. Perhaps, you feel similarly. I hope so.

It'd be great if all other web browser software developers offered similar options to help their users. It'd be great if all manufacturers of mobile devices (e.g., tablets, smart phones, fitness accessories, watches, cameras, auto insurance trackers, etc.) provided consumers with similar options to maintain control of their information and privacy.

What are your options of the Firefox options? Of the options device manufacturers provide?


Asurion Expands Service Offering With Malware Protection For Smart Phones

Asurion, a provider of mobile device insurance services, announced yesterday that it will provide Walmart MobileCarePlus customers with free Asurion Mobile Security software. The Asurion security software is available in the respective app stores for Android and Blackberry smart phone users. According to the announcement:

"The Asurion Mobile Security solution regularly scans messages, pictures, installed applications and files on a customer's phone to identify and eliminate the latest viruses and malware, many of which can access private information and harm the mobile device itself. Safe browsing alerts users before visiting web sites which may compromise their phone's security and in the event a protected phone is misplaced, locate features can trigger an audible alarm, making recovery much easier... During the last two years, 48 percent of high school and college age students required a replacement device due to loss or damage."

For lost or stolen smart phones, the security service also includes a remote wipe feature to prevent thieves from accessing sensitive data and contacts on your smart phone.

This blog has warned mobile device users to add anti-malware software to their devices. Security software is available from a variety of vendors. If you are considering insurance for your mobile device, then read this first to help decide what's best for you.


Data Breach At Nationwide Insurance Affects More Than 28,000 Consumers In Georgia

On Monday, the State of Georgia Insurance Commissioner (GADOI) confirmed a data breach at Nationwide Insurance. Hackers gained unauthorized access to private and sensitive information at the company's online computers.

The announcement contained few details. It did not list the specific personal data elements stolen or exposed, nor explain how the breach happened and what the insurance company is doing so this breach won't happen again.

About 28,467 Georgia residents and policyholders were affected. The insurance company has agreed to:

  • Provide the GADOI with copies of written breach notices sent to affected consumers,
  • Set up a toll-free phone number (800-760-1125) for breach victims to ask questions, and
  • Provide breach victims with at least one year of free credit monitoring services

Some news sources reported that the F.B.I. is investigating the breach. Another news source reported that names, birth dates, drivers license numbers, and marital statuses were stolen. Given the personal data elements stolen, the hackers can do damage.

This is not the first data breach at Nationwide. A check of the breach database at Privacy Rights Clearinghouse found that the insurance company had two small breaches (Florida and New York) during 2007 where laptops containing sensitive personal information were stolen from employee's cars. In 2006, Nationwide was one of severalinsurers affected by a lockbox theft at Concentra Preferred Systems in Ohio.

The insurance company has not disclosed the number of affected consumers in other states. More details will emerge and the number of breach victims will most likely increase since several states require notice of data breaches.


You've Been 'Mugged' In An Auto Accident Insurance Scam. What To Do Next?

Recently, an I've Been Mugged reader wrote asking what to do. She had been the innocent victim in an auto insurance scam:

"Two days ago, I was surprised to find myself in a situation that I believe is a clever scam. It involves auto insurance and a trumped up claim. Although the situation is still unfolding, and my carrier may not pay once they investigate, I am shaken at being on the business end of such a scheme. I'm afraid to drive. I feel unsafe because this person has my address and who knows what else such a person might do."

While I had heard about these scams, I have never been involved in an auto accident insurance scam. And, I had not thought about an insurance claim scam as also being a potential identity theft risk, too. It stands to reason that if some criminals are willing to stage a bogus accident, intentionally cause a collision, and/or submit bogus medical claims after an accident, then they are also willing to abuse the other driver's personal data.

So, what should a consumer do to protect yourself? What can a consumer do to protect yourself after a staged accident?

First, I did some online research to learn about the types of auto insurance scams. My thinking is that by understanding them, it would be easier to recognize them and not get tricked. The Allstate Insurance page lists the types of auto insurance scams and fraud schemes:

  • Swoop & Squat
  • Sideswipe
  • Shady Helpers

I am not going to repeat the scam descriptions here. You can visit the site and read them for yourself. Some are intentional collisions. Sadly, criminals will stage bogus accidents or cause intentional collisions. In 2010, Florida led the nation in the number of complaints about insurance fraud related to staged accidents.

Second, I found that auto insurance company websites often provide advice for their policyholders about how to protect yourself, and what to do if you suspect fraud. The State Farm site lists the types of auto insurance frauds and provides instructions for its policyholders:

"To report suspected insurance fraud, call State Farm or the National Insurance Crime Bureau (NICB) hotline: 1-800-TEL-NICB / 1-800-835-6422"

So, if you suspect fraud, you should inform both your auto insurance company and the NICB. I visited the NICB website to learn more.

The NICB, based in Des Plaines, Illinois, is a non-profit organization dedicated to preventing, detecting, and defeating insurance fraud and vehicle theft. The NICB works with more than 1,100 property and casualty insurance companies. The NICB offers an Apple iPhone app for consumers to report suspected insurance fraud.

According to the NICB, staged accidents occur in every state in the nation. In 2010, the top five cities with the most staged accidents and related auto insurance fraud schemes were:
  1. New York, New York
  2. Tampa, Florida
  3. Miami, Florida
  4. Orlando, Florida
  5. Houston, Texas

And, the top five states were:

  1. Florida
  2. New York
  3. California
  4. Texas
  5. Illinois

The NICB also describes the types auto insurance scams:

  • Swoop & Squat
  • Sideswipe
  • Panic Stop
  • Drive Down

While at the site, I downloaded the NICB Staged Automobile Accident Fraud brochure (Adobe PDF) to learn more. It sounded to me like the I've Been Mugged reader had experienced a "Drive Down" scam.

The NICB also offers a really good flyer for consumers about what to do after an auto accident. Download the Accident Checklist (Adobe PDF). The NICB advises consumers to:

  • Tend to the injured. Call emergency and/or ambulance personnel if needed
  • Keep a disposable camera in your auto. Take photos of the entire accident scene, and damage to your car, the other car(s), and any buildings affected. Take photos of all cars' license plates and Vehicle Identification Numbers.
  • Notify the police immediately, and call them to the scene
  • Get the information (e.g., name, address, phone, insurance certificates) of all other drivers involved, and of any witnesses. Either write down the informaton, or take photos of any documents, especially if the driver is not the registered owner of the other car
  • Notify your insurance company immediately
  • Don't disclose your Social Security Number or bank account information

If you suspect that others involved in the (staged) accident have abused your personal information or committed identity fraud, file a report with local police and get a copy of that police report. I have used the Identity Theft Resource Center (ITRC) website before, and highly recommend it. The site provides plenty of information and advice for a variety of identity theft and fraud situations. If you suspect other drivers in the (staged) accident are abusing your personal information, then Fact Sheet 110 seems to apply. It makes sens to file fraud complaints with your insurance company and with the U.S. Federal Trade Commission (FTC).

If you are feeling particularly vulnerable, you might arrange a consultation with an attorney to get advice about what to do next. Get an attorney referral from somebody you trust and know. I also visited the websites for several states' Attorney General offices, as these websites often contain advice and resources for consumers.  For example, the New York State Attorney General website provides advice for consumers about how to fight auto insurance fraud.

I am sure that some I've Been Mugged readers have opinions or experience with auto insurance claim scams. If you were a victim in a staged auto accident auto insurance scam, what did you do to protect yourself? What resources did you find most helpful?