Vol. 12, No. 2,856W - The American Reporter - March 18, 2006


by Joyce Marcel
American Reporter Correspondent
Dummerston, Vt.

DUMMERSTON, Vt. -- It was a quiet day on the home front, so I called my mother in Ft. Lauderdale to see how things were going down there. As it turned out, she was both shaken and stirred.

A registered letter had come that afternoon, announcing that Conseco, a large Midwest banking and insurance company, was beginning a "radical" restructuring to avoid outright bankruptcy. Therefore, as of that moment, Harold, my stepfather, who is 86, had no more home health care insurance.

But not to worry, the cheerful letter said. Harold has options. Because of state regulations, there is a $7,000 reserve fund in his name, so if he needs home health care, he can tap into the fund - for as long as it lasts. Or he can keep his current policy, which has two years left to run. All he has to do is pay 45 percent more in premiums every month.

In other words, the premium was jumping from an already exorbitant $298 a month to over $400. Harold is a great guy - funny, gregarious and generous of spirit. He still has all his own hair, and he's crazy about my mother.

He's also frail. He has trouble walking because he broke his hip a few years ago and the replacement didn't set well in his porous bones. He is slowly losing the mental acuity that made him a wizard with technical gadgets. I don't have to mention that he, like my mother, is living on a small fixed income, do I?

Right after the letter arrived, Mom and Harold called their insurance agent. He came over immediately and explained that it might be possible for Harold to get home health care insurance from another carrier for about $230 a month - if he could pass a physical, and if he would settle for half the benefits.

Home health care insurance is important to people like my mother and Harold. Like many others in their generation, they were scarred by the nursing homes of the 1970s. These were foul places, reeking of urine, where patients were treated like prisoners. Alzheimer patients - at a time when the disease was still undiagnosed, or at least unnamed - freely wandered the halls, screaming in terror at invisible monsters, wrestling with attendants, or idly removing their clothes. Sentient patients and visitors alike were terrified.

For different reasons, both of my grandmothers ended their lives in these horrible places. I visited them frequently. So did my mother. Even though nursing homes have changed considerably since then, and are an important piece of the health care puzzle, the last thing my mother and Harold want is to be "put away." They want to live out their lives and - if it is possible - die in their own home.

So when they were younger, stronger and healthier, they began paying high premiums to insurance companies for home health care insurance. The idea was that later on, when they needed to draw on it, the insurance would pay for a lot of the home care that Medicaid and Medicare did not cover.

My mother has never drawn on her insurance. Harold used his when he had bypass surgery, when he had hip replacement surgery, and a few months ago when he couldn't walk without excruciating pain. Mother and Harold have different insurance companies, so my mother's insurance is still in effect. But what happened to Harold's?

The answer lies in what happened to Conseco, a Fortune 500 company. Last week, the New York Stock Exchange took Conseco - which sold at $60 four years ago - off the market because its shares hit 34 cents. Why the fall? According to Bill. W. Hornady of the Indianapolis Star, the company racked up $5.8 billion in debt.

Conseco, founded in 1979 by Stephen C. Hilbert, began as a small capital-raising company. It grew into an insurance giant by rapidly acquiring other insurers. By 1996, it had become one of the 500 largest public companies in the country.

"Know for his flamboyant lifestyle, Hilbert became one of the nation's highest-paid corporate executives," Hornady said. "The empire began to crumble in April 1998, when Conseco paid $6 billion to acquire Green Tree Financial, which finances manufactured homes. Critics said Conseco dramatically overpaid for a company unrelated to its line of business. Soon afterward, the market for manufactured homes began what is now a four-year swoon."

By April 2000, an accounting scandal and steadily sliding stock prices forced Hilbert's ouster - with a $72.4 million golden parachute. I'll bet he has all kinds of health insurance. According to Hornady, "Common shareholders stand to be hurt most by Conseco's maneuvering."

Hornaday has never met Harold. Harold and my mother don't read the financial pages, and they wouldn't be able to make much sense of them if they did. This took them completely by surprise. They thought they had prepared prudently for their old age, and that they were as secure as they could possibly be. Now they feel threatened and vulnerable.

In Newsday this past Sunday, book critic Donna Seaman compared the palace of Versailles to modern corporate America: "(The palace) can be seen as counterpoint to the fantastic edifices of our times: the smoke-and-mirror structures of Enron and WorldCom, the devious constructs of men who believe in the divine right of capitalistic kings. The virtual palaces of corporate monarchs and their minions who dwell in a rarefied world of lies and delusion, greed and indulgence, willfully oblivious to the realities of other people's lives and the cruel consequences of their crimes. And the dollar kings won't even leave behind anything of beauty to remind us of humanity's fitful brilliance and endless folly."

She's right, but what is Harold going to do about insurance?

Joyce Marcel is a free-lance journalist who writes about culture, politics, economics and travel.

Copyright 2006 Joe Shea The American Reporter. All Rights Reserved.

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