Saturday, August 18, 2012

How Much Can Patients Learn in a 15-Minute Doctor Visit? - NYTimes.com

Built more like a former professional basketball player than an elementary schoolteacher nearing retirement, the patient dropped a bagful of prescription medications on the table in the examining room and fell back into a chair. He couldn't remember what most of them were for.
Several weeks earlier, he had seen a new doctor who'd prescribed several new drugs and spent much of the visit reciting a list of advice - lose weight, exercise more, stop smoking, eat more fruits and vegetables. Before he even arrived home, he realized he couldn't recall any of the details of what the doctor had said.
"I felt like I was in a Charlie Brown cartoon," he said, recounting the visit with a laugh. "All I can remember the doctor saying was, 'Waw, waw-waw, waw-waw.' "
This patient is far from alone in his difficulty absorbing a fire hose of advice. Thanks to some dazzling advances in preventive medicine and public health, doctors in almost every specialty of medicine now have a panoply of proven preventive recommendations to keep their patients from getting sick. And as the number of validated interventions has grown, so has the pressure on doctors to remind their patients of all the now-standard advice in the course of a 15-minute office visit.
Faced with an impossible task, some physicians have thrown up their hands and chosen to focus on only a couple of topics at each visit. Others have resorted to handing out typed lists of the recommendations for patients to read at home. But an increasing number of doctors, under mounting pressures from insurance companies and others to prove that they are delivering quality care, are simply scrambling to cover as many of the wellness recommendations as they can, piling on the dos and don'ts in what a colleague of mine once referred to as "the grand information dump."
In no other specialty is the problem as acute as in pediatrics, as two papers published this week in the journal Pediatrics underline. For children's doctors, the preventive pearls, which have been amassed in a hefty 648-page official guide titled "Bright Futures," include recommendations on using of car seats, wearing bicycle helmets, limiting television, eating more fruits and vegetables, cutting back on consumption of fruit juice and setting hot-water heaters at no more than 120 degrees Fahrenheit.
If acted upon, all of these recommendations can prevent myriad injuries, even deaths, in children. But it's a humongous "if." Currently there is very little proof that simply telling patients and their families to do something, much less cramming all the recommendations into a 15-minute visit, will result in any behavioral changes at all.
"If it were that easy, we wouldn't have the obesity epidemic we have now," said Dr. Robert Needlman, author of one of the articles and a professor of pediatrics at the Case Western Reserve University School of Medicine. "But we keep serving up these recommendations one after another to our patient families, like waiters at a 10-course banquet.
"It's great when you're flying a plane or doing heart surgery," Dr. Needlman added. "But there's not a lot of great evidence that checklists are the way to go if you are trying to develop a relationship with parents around shared concern for a child."
It may be that for certain recommendations, the message gets across best when it's presented less directly - a possibility suggested by the second Pediatrics paper, a study that looked at how much mothers altered their babies' diets after being counseled by pediatricians on healthy eating habits.
For the study, one set of mothers received the usual advice culled from the "Bright Futures" manual, including giving single-grain, iron-fortified cereal when beginning solids, introducing new foods one at a time and limiting juice consumption. The second group of mothers received more detailed advice and were asked to serve two to four tablespoons of fruits and vegetables each day, never to feed from the jar but to use a spoon and dish, and to start each meal with vegetables. The last group was simply reminded, among other things, not to skip meals, to turn off the television while eating, to eat as a family and to make sure that they themselves ate five servings of fruits and vegetables daily.
After a year, the researchers found that it was the mothers who received guidance about their own eating habits who had made the most changes toward feeding their children a healthier diet.
"Doctors may have good intentions when they're doling out advice," said Dr. Gina M. French, lead author and an associate professor of pediatrics at the John A. Burns School of Medicine at the University of Hawaii. "But we have to come up with ways of giving that advice that actually make a difference for patients."
Both Dr. French and Dr. Needlman believe that more work needs to be done on finding the best ways to relay advice to patients, even if such research results in eliminating certain topics altogether. "It may be that we just can't change certain things in our offices and that there are other places better suited to do so," Dr. French said.
The goal, both doctors believe, would be to find the best combination and most efficient way of relaying recommendations. "Ideally a visit with the doctor is 15 minutes that can be used to build a very powerful relationship and transfer crucial information that will make our patients healthier," Dr. Needlman said.
He added: "Because we have so little time, we have to be able to devote our time to the things that will make a difference."
http://well.blogs.nytimes.com/2012/08/16/how-much-can-patients-learn-in-a-15-minute-doctor-visit/?src=rechp&pagewanted=print

Uwe E. Reinhardt: Health-Care Reform and the 'Doctor Shortage' - NYTimes.com

"Doctor Shortage Likely to Worsen With Health Law," read the alarming headline of a recent article in The New York Times.

The article cites a study by the authoritative Association of American Medical Colleges, according to which by 2025 the nation's demand for doctors active in patient care will be 916,000, while the projected supply is 785,400. The report thus anticipates a shortage of 130,600 patient-care doctors, of which about half represent primary-care physicians.

These figures assume that the Affordable Care Act of 2010 will be implemented as intended. According to the Times article, the association has estimated that the extension of health-insurance coverage under the new law to slightly more than 30 million otherwise uninsured Americans will increase the doctor shortage by 30,000 for any future year, beginning in 2015.

That would double the projected shortage of doctors in 2015, to about 60,000 from a shortage of about 30,000 and would raise the shortage in 2025 from 100,000 without the act to 130,000 after full implementation of the act.

Opponents of the health care law see in these numbers one more useful piece of ordnance. In this case the protest appears to be that we, the well insured, should not be asked to share already scarce health care resources with millions of currently uninsured Americans now adding their claim to these same already scarce resources.

Sometimes this critique is styled as concern for the poor, on the strange theory that having no insurance coverage and ability to pay for care is better than having insurance coverage but having to wait for a doctor's appointment to get non-emergency care.

At its extreme, this argument is amplified by the prediction, reportedly based on opinion surveys, that large numbers of practicing doctors will hang up their shingles in despondent response to the law.

It is probably much easier, however, to talk in an opinion survey about quitting than it is actually to walk away from net practice incomes that even at their lower ranges place American doctors among the top 5 percent of families in the nation's income distribution. That place is unlikely to change under the health care law.

Would all these disillusioned doctors find lucrative employment in the already shrinking financial sector, the only other industry in which they could assuredly garner such high (or even higher) incomes, as some people with medical degrees now do?

Be that as it may, a more fundamental question is what do we mean by a "doctor shortage"? How is it defined and measured?

Consider the doctor-to-population ratios we see across the United States. The chart below provides s snapshot (charts exhibiting these ratios for all statesare also available.) Similarly wide dispersions of the ratio prevailed decades ago across roughly the same states, albeit at lower levels for each.

Association of American Medical Colleges

Take Massachusetts, which for decades has had the second-highest doctor-to-population ratio in the nation, after the District of Columbia. One would imagine that residents of that state would consider themselves comfortably well endowed with doctors – perhaps even excessively endowed.

Not so.

An Internet search for "physician shortage Massachusetts" brings up recent articles with dire forecasts of a looming shortage in that state. They note ominously that RomneyCare, the state-based cousin of and model for ObamaCare, has overburdened an already taut health care supply in Massachusetts.

Nationwide, and in Massachusetts, the doctor shortage is said to be most acute in primary care, a lament that is decades old. Curiously, society's response to that perception has been to let the incomes of primary-care doctors fall relative to specialty incomes.

Although the net incomes of primary-care doctors still rank comfortably in the top 5 percent of income distribution, primary-care doctors have long been and remain the lowest paid of all medical specialties. How can we explain this?

Either Americans are insincere in their lament over the shortage of primary-care doctors and deep down do not value their work as much as they say, or they have forgotten that rudimentary tenet of basic economics: you get what you pay for.

(To its credit, the Affordable Care Act does call for raising the fees paid primary-care doctors under Medicaid to the typically higher level of fees paid under Medicare, to lift the relative incomes of primary-care doctors somewhat. But it is a small gesture and, in any event, will take years before that has any effect on the relative supply of these doctors.)

Leaving that puzzle aside, the chart above raises another series of questions:

1. If, as is said, Massachusetts does not have enough doctors to care properly for the state's residents, what about all the other states in the union? For example, are the governors and legislatures of California and Ohio reckless in letting their populations languish with those states' much lower doctor-to-population ratios, not even to speak of Arkansas and Texas?

2. Should these states' now lower doctor-to-population ratios be raised to the Massachusetts level and, indeed, above it, to offer state residents a fully responsible health care delivery system, now and in the future?

3. How much would it cost to move the rest of the United States to the Massachusetts level?

4. Or could there be something inefficient in the way Massachusetts doctors operate?

I will contemplate these questions, as I hope you will, and I look forward to your comments.

In the meantime, let me note that I am not the only Doubting Thomas on this issue. Jonathan Cohn of The New Republic has remarked on it, as has Eugene Steuerle in his series of briefs "The Government We Deserve."

http://economix.blogs.nytimes.com/2012/08/17/health-care-reform-and-the-doctor-shortage/

Sunday, August 12, 2012

Last Bites - David Sax- NYTimes.com

On Friday afternoons, my father-in-law, Howard Jack Malach, would leave work early and drive across town to Grodzinski, a kosher bakery, before it closed for Shabbat, all for the sake of the babka. Yes, there were closer bakeries with their own babkas in this corner of Toronto's Jewish suburbs, but to Howard, Grodzinski's babka was king — a dense, perfectly moist loaf with veins of dark, sugarychocolate. At home, Howard would set it on the counter (where his wife, Fran, would inevitably tear a chunk off), slicing the loaf for the kids at the end of dinner. The next morning, he'd reheat the leftovers until the chocolate melted, then dunk sticky slices into his coffee.

Three years ago, Howard's prostate cancer, dormant for a decade, metastasized in his bones. As his appetite disappeared, he shed weight at a terrifying pace. The doctor prescribed hormone blockers as a temporary solution, and when the cancer retreated, Howard switched to a raw vegan diet prescribed by a naturopath.

This was tough for me. In the few years I'd known Howard, food was our strongest thread. We bonded over smoked-meat sandwiches and hamburgers, sausages and doughnuts. As hard as I tried, I couldn't feign appreciation for freshly pressed almond milk and cold pizza with walnut crust and cashew chèvre.

Some months later, when Howard was in Florida, the cancer began its final assault. The family pushed for more kale salads and wheatgrass shots, but I encouraged Howard to eat whatever he desired. Each meatball that I sneaked onto his plate not only brought him joy; it also brought us closer.

One night I gave a talk at a Jewish delicatessen in West Palm Beach. Howard had taken his cooler of sprout salads, but when the buffet opened up, he led the charge, elbowing past Florida's aggressive early birds to load his plate with pastrami, corned beef, coleslaw, pickles and potato salad. I managed to snap a photograph of him tearing into a sandwich, but I wish I'd recorded the sigh of pleasure that followed it.

As we drove back to the condominium together, I sensed something different between us. Howard opened up about things I'd never heard him discuss with anyone: work, money, death, his hopes for his kids' futures. Walking on the beach the next morning, he told me for the first time that he loved me like a son.

A week later he returned home, and a week after that he had an operation. After a few days in intensive care, the doctor said he could eat anything, and I asked Howard what he wanted. I brought him cheeseburgers, milkshakes and smoked-turkey sandwiches from his favorite restaurants, finishing whatever he couldn't. When his tumor grew and he couldn't swallow, he asked me to keep bringing food, so he could smell it.

"Just a schmeck," he'd say, inhaling deeply to capture the aroma of a lamb kebab, then groaning in nostalgic approval. Eventually our routine was reduced to Vernors ginger ale, which we dabbed on his lips with a small sponge, one drop at a time.

One Friday afternoon, I stopped at Grodzinski on the way up to the house, where Howard was now under palliative care, to buy a babka. The family rushed through a teary dinner, and at dawn, the nurse woke us up and took us into his room. "It won't be long," she said, her stethoscope to his chest. Standing around the bed — singing, praying, crying — we witnessed Howard's last breath.

Eventually I left the room and began making phone calls. It was Shabbat, which meant Howard's body couldn't be retrieved by the funeral home until sundown. We stayed with him in shifts, but by 9, hunger overtook grief, and I found myself in the kitchen, making French toast. My brother-in-law Evan came up beside me. "You should make it with that," he said, pointing at the babka we'd forgotten to serve the night before.

I sliced the loaf, soaked the pieces in egg and fried them in bubbling butter. The air filled with chocolate and cinnamon and caramel, as the sugars glazed into a shiny crust. Evan and Howard's brother Stephen grabbed the slices straight from the pan, moaning in approval as the melted chocolate filled their mouths.

"What should we call it?" I asked Evan.

His face was streaked with dried tears, but he smiled as he savored this impromptu tribute to the man who lay above our heads. "Let's call it a Howard Jack," he said.

David Sax is the author of "Save the Deli: In Search of Perfect Pastrami, Crusty Rye, and the Heart of Jewish Delicatessen."

http://www.nytimes.com/2012/08/12/magazine/last-bites.html?ref=magazine

Life, Interrupted: Medical Bills, Insurance and Uncertainty - NYTimes.com

Like a lot of other young people, I never thought about health insurance until I got sick. I was 22, and my adult life was just beginning. But less than a year after walking across the stage at my college graduation, I received an unexpected diagnosis - acute myeloid leukemia - and with it came a flurry of consultations, tests and appointments. From early on, my doctors told me I would need chemotherapy and a bone marrow transplant.
But before the shock of the news could settle in - before I could consider where and how I would be treated - I did what most Americans must do when beset with a medical crisis: I called my insurance provider.
Before I made that first phone call, I confess I didn't know exactly what the word "premium" meant. And "co-pay" sounded to me like what happens when friends split the bill at dinner. Certainly, the term "lifetime limit" had no meaning to me yet. The last time I could remember getting sick had been a two-day bout of food poisoning during my junior semester abroad in Egypt. Now, I was facing cancer - and I was beginning to get worried about coverage from an insurance plan I knew virtually nothing about.
If you have a chronic illness in America, there's a good chance you also hold a degree in Health Insurance 101, whether you want to or not. The first thing I learned was how lucky I was to have health insurance at all. (An estimated 49 million Americans, and nearly one-third of Americans 18 to 24 years old, are uninsured.) I was on my parents' insurance, a plan provided through my father's employer. It's a comprehensive plan that will cover me until age 26 - two years from now.
I've been fortunate to be treated by excellent doctors at world-class hospitals. In the last year alone, my insurance has covered over a million dollars in medical expenses, including a bone marrow transplant and 10 hospitalizations amounting to a combined five months of inpatient care. It all sounds straightforward when I explain it like that. But even if you have insurance, the cost of health care - in dollars as well as in time and stress - is incredibly high.
As health care was debated around the country leading up to the Supreme Court ruling on the Affordable Care Act in June, my bills kept coming in. Every time I see a doctor, get a CT scan, receive chemotherapy or pick up a prescription, insurance covers only part of the transaction - and there's always a bill on top of it. For a cancer patient like me who visits the hospital on a weekly basis (and that's when things are going well), every few days I owe another payment. Keeping track of how much I owe, and for what procedure, and why, can make my head spin. Just learning the ins and outs of my plan's coverage takes sustained, persistent attention and energy, things that sick people have in short supply.
And no matter how closely I keep track of the bills, there are always surprises and unexpected charges. During a six-week hospitalization for intensive chemotherapy, teams of doctors trickled in and out of my hospital room every few hours: my primary oncologists, the palliative care unit, gastroenterologists, X-ray technicians, infectious disease specialists and on and on. Most of the time I was too tired, too nauseated or too looped on pain medicine to remember who was who or what they were doing in my room. But my insurance company kept track. Even though my hospitalization was covered, many of the doctors who visited me were not part of my health plan, which meant that for every time they set foot in my room I would receive a steep out-of-pocket bill. After all, what was I going to do: tell the doctor prescribing my anti-nausea medication to skip my room because he happened to be out of network?
Another cost of health insurance is time. Time is money, as the saying goes, but when it comes to cancer and health insurance, to save money takes up a whole lot of time. My mother graciously took on the task of disputing claims, keeping track of bills, requesting approval for a procedure or a drug, and spending countless hours on the phone with my provider. While it may be a labor of love for my mother, in practice, working out insurance questions is just a lot of labor. Between the long hours spent taking care of me and dealing with our insurance, my health care became my mother's full-time job.
So far, the out-of-pocket costs associated with my cancer care - co-payments, out-of-network charges, the costs of moving to a new city for treatment, fertility treatments not covered by insurance - have reached tens of thousands of dollars. The financial burden of cancer has not yet meant that my parents will need to get second jobs, or that we will have to sell our house - though I know of fellow cancer patients with and without insurance who have had to consider such options. But my mother has had to take the last year off work, a financial and professional sacrifice that's due in part to the time required to manage my health insurance. What do others do who don't have full-time help from a caregiver? My mother would do anything for me, but I wish she would be able to spend less time with my bills and more time with me.
In two years, I'll graduate from my parents' insurance. What will I do about insurance then? Perhaps I'll gain coverage through an employer - though holding a job seems like a tall task if I'm still in treatment. Isn't it a contradiction that insurance is often tied to employment, but that the sick people who need it most are the ones who have the hardest time staying employed? If the Affordable Care Act remains in place, at least I won't be denied coverage because of pre-existing conditions. That's a huge victory, but what will the cost of that coverage be, and will I be able to afford it?
When I'm lying in bed at night, I often worry about how cancer may affect my future: my career, my relationships, my dreams. Sick people don't plan on getting sick. We shouldn't have the added worry that someday insurance coverage may not be there. Or that a medical crisis could become a financial one too.
Over the coming weeks, Well will explore the reasons behind our troubled health care system from the perspective of the patient. The series is part of a larger New York Times project called The Agenda, which focuses on critical issues facing the next president and Congress. Join the conversation at The Agenda
Suleika Jaouad (pronounced su-LAKE-uh ja-WAD) is a 24-year-old writer who lives in New York City. Her column, "Life, Interrupted," chronicling her experiences as a young adult with cancer, appears weekly on Well. Follow @suleikajaouad on Twitter.
http://well.blogs.nytimes.com/2012/08/09/life-interrupted-medical-bills-insurance-and-uncertainty/?src=recg&pagewanted=print

Are You Worth More Dead Than Alive? - NYTimes.com

'Do you see lights?" Ruben Robles asked his brother, Mark, in 2007. Bright, star-shaped and white, they flashed before Ruben's eyes while he was driving, shopping at Costco, feeding the cats. Mark didn't see anything, so Robles went to a doctor, who thought that the visions might be stress-induced. Robles ran a collection agency in Los Angeles, and the hours were long, the debtors argumentative. Several weeks later, Ruben began suffering seizures. He went to see another doctor, and this one ordered an M.R.I., which revealed a ghostly white orb on his left frontal lobe. The diagnosis was brain cancer. Only 36 years old, Ruben was told that he might not live to see his 38th birthday.

Horrified, Robles says he thought constantly about God. But his crisis was practical as well as existential. Over the next year and a half, surgeons operated on his brain three times, excising as much of the cancer as they safely could. The side effects of the operations left Robles barely able to walk and unable to speak more than a word or two at a time. He shuttered the collection agency. His wife left him, and Robles, needing daily help, squeezed into his mother's Chihuahua-filled apartment. The medical bills were mounting, and Robles was worried: though he believed God would provide for him in the afterlife, what he desperately needed until then was money.

Ron Escobar, a close friend of Robles's, went to Carole Fiedler, an insurance expert, for help. Fiedler saw that there was no vacation home or Google stock to unload. But Robles did have a life-insurance policy for half a million dollars. Life insurance is designed to benefit the living, a spouse or heirs, not those who perish. But Fiedler, who owns a firm called Innovative Settlements, knew that a life-insurance policy is an asset that can be resold to a friend or stranger just as a car, boat or house can. In a transaction known as a viatical settlement (for terminally ill patients) or a life settlement (for everyone else), the person selling his insurance gets an immediate cash payment. The buyer, in exchange, is named as the beneficiary and pays the premiums until the insured person dies. Life no longer afforded Robles a traditional way to make money, but to the right investor, Fiedler advised, his imminent death was worth a great deal.

Selling your life and selling a house have more in common than you'd think. The seller puts a listing on the market. Prospective buyers do research and get inspections; there are offers and counteroffers until the seller accepts a bid. The seller doesn't literally peddle his own life, of course, but his life-insurance policy. The distinction is in many ways moot, however, as the sales value is inextricably linked to a cold-eyed estimation of how much longer the seller has to live. In the case of Robles's policy, a life-settlement company in Georgia, Habersham Funding, expressed interest. Escobar shipped off six boxes' worth of Robles's medical records, thousands of pages in all, to Habersham. The firm, in turn, analyzed the records and also had them scrutinized by an external company specializing in life-expectancy analysis. Fiedler's recollection is that the reports confirmed the grim prognosis and that Robles had less than two years left to live.

Fiedler, for her part, tried to convince Habersham that Robles was knocking on death's door. The sooner Robles died, the fewer premiums the buyer would have to pay and the greater the potential value of his policy. "I would never lie, but my job is to make my clients look as bad as possible," Fiedler says. Habersham opened its bidding at $250,000. "You've got to give us more money than that," Fiedler recalls yelling during a phone negotiation. "This guy is really sick!" The company bumped its offer to $305,000. Fiedler accepted, and the stakes were set. The buyer's profit would be the $500,000 insurance payout upon Robles's death minus the $305,000 settlement and whatever the company had paid in premiums. Escobar, meanwhile, was hoping that his friend could beat the grim odds. "I told Ruben, 'Look, they're betting that you're going to die,' " Escobar says. " 'You're betting that you'll live.' "

Betting on when somebody will die seems so creepy that it's hard to believe the practice is legal. Sure, people pay good money to buy life-insurance policies, so perhaps that should confer the right to sell them as well. But the freedoms of ownership are not unlimited, especially when it comes to anything related to life and limb. Possession of and control over what happens to your own body is a fundamental human right. Nonetheless, that hasn't stopped cultures from banning prostitution, organ sales or for-profit surrogate parenthood. The justification for such infringements upon bodily sovereignty is that people should be protected from financial incentives to harm themselves, and you could argue that a life settlement creates just such an incentive. A potential recipient, for instance, could try to win a larger settlement by offering a guarantee — if I'm not dead in, say, five years, I promise to kill myself so that you can collect the insurance money. That situation is admittedly far-fetched, but history has shown that when there's a payday offered for someone's demise, unscrupulous people will step in to hurry death along. In 16th- and 17th-century England, for example, it was legal to take out a life-insurance policy on a complete stranger, and as the historian Sharon Ann Murphy wrote, "these speculative life policies too often resulted in the murder of the insured."

There are no known cases of murder to collect a life settlement-linked insurance payout. The financial practice originated not as a criminal scheme but as a way to help the terminally ill. In the late 1980s, people infected with AIDS often had little time to live and a great need for money. In response, financial planners established the viatical business. Flyers went up at gay bars and clubs encouraging people to sell their life-insurance policies for quick cash. Some financial planners even trolled hospital wards to find customers.

As the 1990s drew to a close, brokers realized that their thinking had been too limited. "The investors who had started this whole industry realized that the customer doesn't just have to be someone who is terminally ill with H.I.V.," says John Kraemer, a life-settlement broker in Southern California. "They could be anyone with an age or other health consideration that shortens life expectancy."

Rebranded and redefined, the life-settlements business grew swiftly, reaching $12 billion in transactions by 2007. The recession has since walloped the industry, as have well-publicized cases of fraud, in which unscrupulous brokers persuaded people to take out life-insurance policies expressly for the purpose of reselling them a couple of years later. Only $3.8 billion worth of policies changed hands in 2010, but insiders hope that the business will ultimately surpass its previous high. There are $18 trillion worth of active life-insurance policies in the United States alone, and very few people even know that they can sell their policies. "The public awareness is next to nil," says Clark Hogan, the managing director of Opulen Capital, a life-settlements brokerage in Southern California. "The industry is in its infancy."

Advocates of life settlements say that they offer fiscal relief in hard times, especially to seniors whose retirement portfolios have tanked. "We need to be singing at the tops of our voices that selling your life insurance is an option," says Scott Page, president of the Lifeline Program, a large settlement company. For potential investors, meanwhile, the pitch is that settlements offer a safe harbor. Let the Dow rise, let the Dow fall; a death payout is an uncorrelated asset whose timing bears almost no connection to the mood swings of the market. In addition, both sides participating in settlement transactions are winners: the policy seller is paid upfront, and the buyer is paid even more later. Both parties are playing with house money — that of the insurance company — and the only question is how it will be divvied up.

For all the supposed benefits, settlements still strike many people as creepy. They invert the traditional incentives of life insurance. Insurance companies have always had an interest in you, the policyholder, living as long as possible so that they can collect more premiums. Generally, you also want to live a long time, for obvious reasons. But a settlement means someone hits the jackpot when you die, and the sooner that happens, the more money that person makes.

Clark Hogan represents people who want to sell their life-insurance policies. To find new clients, he cold-calls financial planners, accountants, attorneys and insurance agents. "Hey, good afternoon, Clark Hogan here," he said one afternoon at the end of last year. "I'm wondering if you've ever had a client surrender a life-insurance policy and if you've considered a life settlement instead. . . ."

Seller's agents like Hogan say that while it may seem wrong for strangers to profit from your demise, settlements are a resoundingly pro-consumer innovation. In the casino of life insurance, the game is rigged. The industry's profit models rely upon the fact that more than two-thirds of customers lapse — stop paying premiums — before dying, thus invalidating their policies before their beneficiaries can collect a cent. People often have good reasons for doing this. A husband outlives his wife, the intended beneficiary. An elderly woman with a dwindling pension decides that she needs money for medical care now more than her heirs will need it later.

Policyholders have only one possible escape route beyond lapsing. If the policy has a redemption provision, the customer can sell it back to the insurance company for a tiny fraction of its full face value. But this option represents the prison of a monopsony, a marketplace with only one possible buyer. "You wouldn't want to buy a Ford and turn around 10 years later and find out that the only entity you could sell it to is back to Ford," says Vince Granieri, the chief actuary at the life-expectancy company 21st Services. Settlements let the consumer shop a policy to multiple buyers and potentially get anywhere from 2 percent to more than 60 percent of its face value. For most people, discovering that they can sell an asset whose value rivals that of their house is a joyful surprise. "It's almost like finding money under the mattress," says John Yaker, former president of Quantum Life Settlements.

Hogan's cold calls that day yielded two financial planners who offered to send settlement cases his way, but receptive audiences aren't the norm. One planner he called dismissed life-settlement brokers with an expletive. Hogan curled over toward the speakerphone as if in abdominal distress but replied in upbeat tones. "This is the fight I have to win on behalf of the financially distressed life-insurance policyholder," he said, "to persuade them that there are legitimate buyers out there serving an industry that's trending toward legitimacy."

Life settlements have a dubious past indeed; as relatively new, poorly understood and, until recently, minimally regulated transactions, they have been prime terrain for fraud. The most notorious scheme even has its own acronym, Stoli, for stranger-originated life insurance, which typically targets the elderly. I spoke with one couple — wealthy, elderly retirees in Florida who asked not to be named — who were routinely approached to take out life-insurance policies. "Every other day you'd get invited for a free dinner at a high-class restaurant as an incentive to listen to a spiel on life settlements," the husband said. That the couple didn't actually have insurance did not dissuade the pitchmen. "They would try to convince you to take out a policy, hold it for a while and then flip it," he said. The shady brokers offered to cover the premiums; after two years the brokers would get themselves named as the beneficiaries on a policy and then wait for the couple to die so that they could collect the insurance-company payout.

Such a scheme might not seem all that different from life settlements in which the policy seller wasn't put up to the transaction by a stranger — either way, you wind up having a third party that profits when the policyholder dies. But life-insurance contracts specify that the person taking out the policy must be doing so on behalf of himself, a relative or a business partner whose death would cause direct financial harm. So insurance companies have argued that Stoli is fraud, a contractual violation, and state legislatures have agreed. With the active support of the life-settlement industry, which wants to establish its legitimacy, settlements are now regulated in all but five American states, and most of the new laws explicitly ban Stoli.

Last fall, hoping to raise awareness of his reformed industry, Scott Page created one of the odder viral marketing campaigns ever to hit the Internet. In the video "I'm Still Hot," the actress Betty White sits atop a golden throne and raps about settlements to a bevy of shirtless male models. "I hooked up with the Lifeline/I got big cash in no time," White says. The video has been viewed nearly 1.5 million times on YouTube, clearly a viral victory for Page's Lifeline Program, though the message arguably gets lost amid the pecs and octogenarian break-dance sequences.

To spread the pro-consumer message, the industry might do better simply to run advertisements featuring real customers with settlement-fattened wallets. A client of Innovative Settlements named Arline Maisel, for instance, obtained a settlement for her father after he received a diagnosis of prostate cancer. The family used the money to rent a house in Colorado so that the sick father, his children and grandchildren could gather together for what proved to be his final year alive. "All of this takes money, and lots of it," Maisel told Carole Fiedler. "I know that a lot of people think that what you do is macabre . . . but I can tell you that you are in reality a dream weaver and a lifesaver."

Fred, a retired engineer in Texas, agreed to explain the buyer side — that of settlement providers who invest in the future deaths of policyholders — on the condition that his full name not be used. A decade ago, Fred worked as a sales representative for a company called Vespers, which arranged viatical settlements for terminally ill policyholders. The company then sold shares to investors who would be paid when those policyholders died. Fred himself invested $200,000 in 10 different policies. The way it was supposed to work was that he would pony up a share of the settlement award, typically less than 10 percent, and would receive that same percentage, minus the premiums paid, of the death benefit once the insured person died.

Life-settlement investors, like those in other sectors, crave timely information about their holdings, and the key metric for predicting portfolio performance is the health status of the policyholders. To acquire this sensitive information, Fred says a Vespers representative would call and question the policyholders — or their adult children, nurses and doctors — as often as quarterly. He would then receive tracking reports summarizing what the company learned.

In the report for the third quarter of 2007, for example, Fred got updates for more than 100 policyholders, each of whom is identified by name. He could look up one man and learn that "his health is fine." He could find out that the last time another policyholder was seen by a doctor "her condition [was] poor due to the spread of her breast cancer." The briefest entries in the tracking report heralded investments that paid off: a name, followed by a notation like "03/31/2006 — Date Deceased." To date, Fred has been paid for seven such maturities. But his portfolio isn't entirely closed out. "I still have three policies left," he told me. "I'm waiting on them to die!"

This sort of profit-motivated death watch disturbs people like John Cautillo, an executive for a food-service company in New York. In June 2011, Cautillo helped his fiancĂ©e's mother sell her life-insurance policy. Quantum Life Settlements brokered the deal, netting a settlement of more than $2 million, which the family used to pay off a loan taken out to pay for the insurance premiums. Cautillo says that he would "absolutely" recommend the transaction to others. Yet the process is unsettling. "Someone owns my future mother-in-law's life now," he says.

Investors like Fred take umbrage at the suggestion that they're rooting for death. "We pray for all of our people, that they would have a good life and be able to use this money" from the settlement, he said. Besides, he knows what it feels like on the other side of the fence. He sold his own insurance policy a couple of years ago and is now on the receiving end of calls from a provider wanting to know the latest on his health. Fred laughs about this. "I say: 'I'm still alive! I'm hanging in there!' "

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http://www.nytimes.com/2012/08/12/magazine/are-you-worth-more-dead-than-alive.html?ref=magazine&pagewanted=print