As you might imagine, yesterday’s post on the excessive and deceptive nature of broker compensation raised a few hackles. I received several protests from brokers/agents who argued that they are saddled with inordinate responsibilities in exchange for their commissions.

In the interests of fairness, we should first keep in mind that what brokers do for the money is distinct from the inappropriateness of the scale and manner of their compensation. These are separate issues, and despite what many of them say, it is difficult to reconcile their inherent financial conflicts with the plans and their representation that they are employer advocates.

Then we should put aside most people’s two natural responses to brokers’ pleas that we appreciate their workload: 1) Who cares? and 2) How is this different than the rest of us?

But with those issues out of the way, brokers’ arguments about the relationship between their compensation and responsibilities do make a significant statement about their role as flak-catchers, trouble-shooters and intermediaries between an increasingly dysfunction and unresponsive health plan system and increasingly irate enrollees and employer benefits managers. Here are a couple more comments, from the same, very articulate broker I quoted yesterday.

As a personal aside I want to emphasize that this guy’s not whining – he was the one who brought up the subject of crazy broker compensation in the first place. Instead, he’s trying to present a balanced perspective on how brokers are a cog in a much larger set of gears that are spinning out of control.

Your readers probably think I sit on my fat butt and collect big paychecks and do nothing for them.

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OK. Now that Matthew’s away, let take a break from picking on the doctors, the hospitals, the health plans, the drug companies, and the device companies. Let’s talk about the brokers.

Brokers, you’ll recall, connect health plans and employers. They typically represent themselves as unbiased, protecting employers’ interests and helping them objectively negotiate the hall of mirrors on the path to buying health benefits.

There’s only one problem with this story. Brokers are generally paid sales commissions by the health plans. They are not paid by the employer, but by the insurance companies. Which of course makes them maybe a teensy bit less objective than we might like.

And they’re not simply paid. They’re paid VERY WELL, often 6%-10% or more of the premium.

Here’s a note I received over the weekend from a broker pal in Florida where, like everywhere else, the explosion in health care cost is pricing increasing percentages of small business purchasers out of the coverage market. Prospects are increasingly hard to find and close, so the plans have been raising the bounties. He writes:

One specific thing I remember from your presentation several years ago is really ringing true.  You mentioned that we, as agents/brokers, were probably being overpaid for our services (via inflated commissions).  I was probably the only agent in the room who agreed with you. Well, it has gotten worse in Florida.  One carrier is paying $30 per employee per month regardless of premium for groups of 4-50; another is paying a whopping $41 a month per employee!   For most of last year and the first six months of this year, another carrier was paying a base commission of 5% of gross premium (with production bonuses pushing that to 7% for most agents/brokers), AND was paying a $1,000 bonus each month for any agent who submitted two groups of  more than 4 employees; $5,000 each month for those agents submitting 3 -5 groups of at least 4 employees each; and $7500 for 6 groups per month or more.  Many of us were getting at least the $5000 bonus each month, sometimes for as little as 15 or 20 covered employees TOTAL for the month!  This means that they were paying us either 5% or 7% of gross premium AND a huge bonus, which annualized pushed most of my business with that group close to 10% commission average. That’s ludicrous when the public is scrambling to try to pay premiums – and it is indicative of how out-of-whack our current insurance market is.The industry is heading down the tubes, slowly but surely.  I now think it is inevitable that the government will eventually weigh in, and I don’t see how it can be otherwise (especially in a low-wage state like Florida, where small group health insurance premiums for families in their 50’s and 60’s can easily approach $2,000 a month and more).

Let’s talk for a moment about the employer with 50 employees who is buying coverage in good faith. What would be the response to the knowledge that on a one year 50 employee contract, $24,600 ($41x12x50) goes to the broker. This is the person who convinced you to buy a particular plan, though if you had gone with the plan he disparaged, he might have taken home only half that.

Both are excessive, of course, but the deeper issue is whether the employer knows that the broker will be paid a commission by the chosen plan, and the size of that commission.

It’s simply another case showing that, without transparency, the health care marketplace can’t work and the walls come closer to tumbling down.

The NY Times, certainly not known as the bastion of the Right, snuck a very important article into the ‘non’ news day of Saturday. Interesting that this did not get saved for the front page on a Monday…

In it, some of the dirty secrets of the SCHIP bill passed earlier in the US House get revealed. Specifically, the article details attempts to provide special relief to specific companies currently ‘in favor’ with the political class. Several dozens hospitals, never mentioned by name, are slated to see multimillion dollar increases in their Medicare funds.

Hospitals are designated by their Medicare number, or location, or distance from a city with a certain population, to receive an arbitrary ‘most favored nation’ status.

Rep. Pete Stark, who has a diagnosis and solution to every hint of health care related inequality and corruption- link is one of dozens available… () , suddenly has lost his powers of deduction. “It’s always been thus,” Mr. Stark said in an interview. “I am at a loss to explain why.”

Even more stunning is his admission that, “Granting relief to particular hospitals is sometimes a way for Congress to improve “the equity and fairness” of Medicare payments, Mr. Stark said. Under Medicare, he added, “you are basically setting prices, and the system is clumsy.”

Though, in this case, nearly all the chicanery lies at the doorstep of Democrats, at least one Republican is involved as well. Herein lies, of course, the problem of over-investing power in the hands of government and their bureaucratic appointees.

THCB should be proud that the analysis here recognizes that policy details matter—and that hiding detritus in legislation can undermine the stated goal of the legislation. SCHIP was purported to make access to health insurance more fair and more just.

The NY Times exposes that, in addition to being bad policy, the legislators are more interested in supporting political financiers and whomever else they deem a favored political class at the time.

Yet Nancy Pelosi, who claimed the title of ‘most ethical Congress in history’, apparently has nothing to say. Instead, she sticks a spokesperson out to say, “It’s easy to criticize individual provisions of large, complex bills, but “the focus should be on the huge number of uninsured children who will be eligible for life-saving health care under our bill.”

In other words, the majority leader treats us all as nameless, faceless clones that are supposed to echo the words, “move along”.

For the next ten days or so THCB will be having a series of guest authors….please welcome them, and my thanks to them, and to all of you for reading!

If you have any THCB, Health2.0 or business questions for the next week or so please email John

Because I’m off getting married 🙂

As many of you know, Matthew has punched his timecard, hung up his keyboard, and is blissfully away with his beloved on a well-deserved honeymoon. With consulting gigs, the daily demands of maintaining the best and most entertaining health care blog going, and responsibility for the ever-approaching (Sept. 20) Health 2.0 conference, it was a perfect time for Matthew and bride to slip away, unencumbered by the always-shifting sands of health care. We’ll miss him, but he’ll be back soon, and we’ll try to keep you enlightened and amused while he’s gone.

I’m Brian Klepper. For the last couple months, I’ve been posting over at The Doctor Weighs In, where I’m the only "fake doctor" – a PhD – among a stable of several very thoughtful and readable physicians who include caregivers, scientists, managers and analysts. Over the last several years, I’ve worked hard on a national health care reform effort – See how effective its been? – The Center for Practical Health Reform.  But the peculiar nature of my work has also let me see a great deal of interesting programs that work, and many more that don’t. While I’m here, I’ll do my best to share some of that with you.

So here we go. Bear with me. I’m not Matthew of course – who is? – but there’s plenty to share with you that you’ll find interesting. While Matthew is encyclopedic, he tends to focus on the influence of health care IT. I do my best to be equally broad, but with more of a focus on insurance, benefits, the dynamics in the provider marketplace and the health care supply chain. If I’m lucky, I’ll be able to cover a good deal of that and generate one or two "Ahas!" as well.

Apparently, a guy who’s now a leading liberal blogger, Jerome Armstrong, was touting stocks online without revealing that he was paid to do so. He just paid a $30,000 fine to settle the case. And apparently his partner Markos Zunigas of DaliyKos fame was trying to get other liberal bloggers to cover it up, or at least not talk about it.

But beyond all the “the netroots are politics as usual” and “these guys are just like Tom Delay” comments, has anyone stopped to consider two things.

First, this happened in 2000 before Armstrong was a blogger, or at least before anyone had heard of blogging. So exactly what it has to do with him being a blogger I don’t know.

Second, wild claims about a stock on a message board called “Raging Bull” in 2000 at the height of stock mania? Well just imagine that! I mean I’m all for the SEC cleaning out its dirt laundry a few years later—although I’d be just as keen for them to keep looking into say Bill Frist (Investigation stopped) or his professional colleague who had the same result. But there was rather a lot of that going on back in the day (including a 15 year old who was way better at it than Armstrong), and frankly if you’re dumb enough to believe what you read on a stock message board, then that’s not the kind of government safety-net that I’m most in favor of!

But of course if anyone wants to pay me a fortune to tout their stock, and has the political connections to head off the subsequent SEC investigation, I’m all ears. In fact I’m surprised that no one has ever asked me!

Brian Lapidus is a seasoned expert in security and risk mitigation who focuses on the increasing challenges faced by the public and private sectors in protecting sensitive data and personal information from loss, theft and fraud.

The chief architect of product development at Kroll’s Fraud Solutions group, Lapidus sets direction for the company’s continued success in identity theft discovery, investigation and restoration.  Lapidus is particularly knowledgeable about the security gaps – physical, procedural and electronic – common to many U.S. companies and organizations, as well as the criminal landscape where stolen identities are bought, sold and used.

He is frequently quoted on the types of data breaches being experienced by thousands of organizations, and what steps can be taken to better protect confidential data and to recover should a data breach occur.  He oversees a highly-skilled team that includes veteran licensed investigators who specialize in supporting breach victims and restoring individuals’ identities to pre-theft status.

The fact of the matter is that patients – and
the law – demand that healthcare companies protect highly sensitive information
from every possible threat. But in-house security options just can’t keep pace
with rapidly growing risks. After all, anti-virus software won’t stop someone
from taking medical records. A firewall can’t help retrieve a stolen
laptop.  Below, I answer several questions that every healthcare
organization should know.

Q: Why are healthcare organizations particularly vulnerable to data breaches? A: There are several factors that make healthcare organizations particularly vulnerable to data breaches. Some of these factors include:

I. Sensitivity of data – The  healthcare industry is responsible for maintaining its patients’ most   sensitive Personal Health Information. PHI is a treasure-trove for identity thieves.

II. Immense Data flow (masses of data flowing in and out) – A primary reason healthcare data security breaches occur is because facilities do not know where all instances of their patients’   sensitive or confidential information resides within the network. Moreover, the danger does not stop at the hospital perimeter, but includes vendors that share or receive the data, as well as employees’ and contractors’ laptop   computers and other portable storage devices.

III. Portability/Usage of EPHI (Electronic Protected Health Information) storage devices – Improvements in technology and the portability of patient data come at a cost to security.   Devices used to store and access PHI include laptops; home-based personal   computers; Personal Digital Assistants (PDAs) and Smart Phones; USB Flash Drives and Memory Cards; floppy disks; CDs; DVDs; backup media; Email; Smart cards; and Remote Access; not to mention hotel, library or other public workstations and Wireless Access Points (WAPs).

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