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Iron Kay — Insurance Companies Pick Fight With Wrong Family

12:30 pm in Uncategorized by Consumer Watchdog

Iron KayDan Shea’s Aunt Kay was 83, vibrant and healthy in 2011, when she suffered terrible injuries in a head-on accident. Kay spent five months in the hospital rehabilitating and being repaired with so many metal parts that the family dubbed her “Iron Kay.”

Then the real fight began—one that changed Dan, a San Diego civic booster and Republican notable, into an implacable foe of insurance company tactics. He’s told Kay’s story in a short, even charming, video, “The Iron Lady,” that calmly exposes corporations trying to outwait Kay’s lifespan to preserve their profits.

Farmers and two affiliates of Nationwide have been resisting a settlement for more than two years and counting. It’s costing the corporations a bundle, but if Kay dies before their legal options run out, they’ll save a bundle. It’s a perfectly legal tactic, which Dan is determined to change. The fight is Kay’s reason for living through her pain.

Kay will never be the same: She can’t drive and can barely walk. She’s living with family and dependent on them. But she’s fully determined to get as far back to normal as possible.

Kay expected to at least recover financial independence, even after $800,000 in hospital bills. Both Kay and family of the 17-year-old boy in the truck were very well-insured by major companies. The boy was at fault, but there was no rancor between the families.

Then they encountered the insurance lawyers. It ultimately dawned on them that the insurance companies would benefit by delaying until Kay died, to make most of their liability disappear.

Kay originally did not want to sue, so Dan asked for mediation. Farmers Insurance, the boy’s insurer, agreed but stalled for months. Then the insurers offered a ridiculously low settlement–barely over half of the medical bills, much less her ongoing medical costs. Then they stalled some more and tried intimidating Kay with a long deposition about her life since adolescence.

When the case got to court in October of last year, within a few days a jury spurned the insurers’ argument that they really owed little, and awarded Kay $2.1 million dollars.

Kay hasn’t gotten a penny. The insurance companies stalled again, and on January 7 they demanded a new trial. When it’s denied, they can file for an appeal. That could string out for a year or two.

Dan Shea found that having plenty of insurance, no matter how much it costs in premiums, doesn’t mean the company will protect you when you need it. And that everything the insurers have done is within the law.

Dan and his family have the determination and resources to keep fighting, and Dan is calling on state legislators to fix these interminable delays.

The fix shouldn’t stop at auto and property insurance. There are also horrible insurance company incentives embedded in state medical malpractice law. For instance, if an infant is severely disabled by medical negligence, insurers for the doctor and hospital could have to pay millions for a lifetime of expert care.

If the baby somehow dies, its economic value dies, too. The law in California restricts dead-child lawsuits to such a low payout that grieving parents usually can’t even get a lawyer to take their case. So what incentive does an at-fault hospital or doctor have to keep that baby alive?

The same is true if the wronged patient suffers a terminal illness—why pay now if you can stall until the problem literally goes away?

We need more people with Dan’s determination to change this.

Posted by Judy Dugan, Research Director Emeritus for Consumer Watchdog.

Lessons From The Cancellation Crisis

12:53 pm in Uncategorized by Consumer Watchdog

Jamie CourtAn analysis just released by California’s health insurance exchange, Covered California, offers the first real insight into the depth of the Obamacare cancellation crisis.

About 450,000 of the 900,000 cancelled California policyholders will see rate hikes, according to the analysis released by Covered California. That’s 50% of all cancelled Californians who will be paying more.

Most strikingly, half of those cancelled policyholders are getting policies that are little different from the ones cancelled, deemed by Covered California “comparable policies. ” In other words, half of cancelled California policyholders are paying more, in some cases a lot more, for policies that are worth no more under the Affordable Care Act. Covered California reports the other half – 225,000 — will pay more for better benefits since they had “Thinner Plan.”

Despite the ugly stats, the Covered California’s board of political appointees voted to block President Obama’s call for extending cancellations for another year. The Covered California contracts with health insurance companies, written at the insurers’ request, required them to cancel the 900,000 Californians. Thursday the board of political appointees refused to reverse course, arguing that would create more problems.

The happier headline Friday that 360,000 Californians have applied for coverage with California Covered is little surprise given that 900,000 policyholders have nowhere else to go because of its actions. And that was the point of the cancellations – drive the individual policyholders into Covered California’s pool.

The problem is that pool has premiums that are much higher than what they should be and doctor and hospital networks that are much too small. Cancelled policyholders would care less if they had comparable prices and comparable benefits. And that’s what reformers should be fixing, rather than defending as reasonable.

35 states have rate regulation but not California. So benefits and premiums will continue to be out of whack until voters set the insurance industry and its political allies straight through a ballot measure next November, which requires approval by the elected insurance commissioner for rate hikes and benefit changes.

Cancelled Plans

The Covered California analysis shows that 35% of cancelled policyholders will get subsidies for policies, so they will get rate relief under the Act. That doesn’t mean taxpayers aren’t paying too much for those policies, only that low income consumers are getting help.

The analysis, by one of the biggest boosters of the ACA, discredits an argument among other boosters that is troubling: why do we care that cancelled policyholders are losing ‘junk insurance.”

Our consumer group supported the ACA, and its research and education inspired its bans on junk insurance, preexisting condition limitations and medical underwriting. The fact is, however, that cancelled policies in California are, by and large, not junk. Their physician and hospital networks under old policies are far broader than under the Covered California plans. Of course, no one is watching, since our insurance commissioner has no power over prices.

Rate regulation is one answer, but until the 2014 election, when California voters can make that change, backers of the ACA also have to stop insisting its policies are always better, even if they cost more and cause doctor dislocation. That just won’t fly with a public that knows far better. Californians know when their doctors are not in the networks in the new plans and their premiums are higher.

If we want to save the ACA, then we better make it work. That includes acknowledging its flaws and trying to make them better.

In a state like California, without rate regulation and with much ACA support, it’s unthinkable that Covered California would buck the president and California Insurance Commissioner Dave Jones’ call for a reprieve on cancellations when its own numbers show 450,000 are paying more under the ACA.

It’s the continuation of a troubling logic that you are either for the ACA, and the relief it extends to 48 million uninsured, or against it. That type of reasoning will alienate the middle class, which is largely without subsidies and facing a real crisis in cost in states like California. These policyholders need relief too. And that means bucking the insurance industry, something its business partners at Covered California seem completely unwilling to do.

If the most ardent backers of the ACA don’t start to think like average citizens, there’s little reason to believe the vital center and muddled middle will continue to support the ACA. It’s time to wake up and smell the rate hikes and insurance company shenanigans for what they are – wrong, plain and simple. Then we can work together on fixing them.


Posted by Jamie Court, author of The Progressive’s Guide to Raising Hell and President of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Blue Cross Suspends Mandatory HIV/AIDS Drug Mail Order Program

2:02 pm in Uncategorized by Consumer Watchdog

Pills and Bills

In response to consumer complaints and a class action lawsuit on behalf of HIV/AIDS patients in California, Anthem Blue Cross has agreed to suspend a program that would have barred patients from purchasing certain specialty medications at local pharmacies. Under the program, patients would have been required to obtain their medications by mail order, threatening their health and privacy according to the lawsuit.

Blue Cross announced the suspension of the mail order program in a letter arriving in consumer’s mailboxes this week. Download a copy of the letter here.

“The deferment of the mail order program is great news for thousands of Blue Cross customers with HIV/AIDS who were facing risks to their privacy and health,” said Jerry Flanagan, staff attorney for Consumer Watchdog.

The lawsuit, filed last month in San Diego Superior Court by Consumer Watchdog and Whatley Kallas LLC, alleges that the mandatory mail order program illegally targets HIV/AIDS patients. The lawsuit further alleges that due to the complex nature of HIV/AIDS drug regimens, patients rely on their local pharmacists who, working directly with the patients, monitor potentially life-threatening adverse drug interactions, and provide essential advice and counseling that helps HIV/AIDS patients and their families navigate the challenges of living with a chronic and often debilitating condition.

In addition to the health concerns raised by the change in their continuity of care, HIV/AIDS patients have expressed serious concerns associated with a loss of privacy due to the proposed mail order program. For example, HIV/AIDS specialty medications often need to be delivered in refrigerated containers. Patients who live in apartment buildings or need to have their drugs delivered to their place of employment are concerned that neighbors and co-workers who are not aware of their condition will come to suspect that they are seriously ill.

Under the mail order program announced by Blue Cross in December and slated to go into effect on March 1, 2013, HIV/AIDS patients’ insurance policies would have no longer covered medications purchased at local pharmacies.

The deferment is intended to allow Blue Cross, Consumer Watchdog, and Whatley Kallas LCC time to develop a more consumer friendly program.

“Blue Cross should be commended for listening to the serious and heartfelt concerns of their customers who depend on local pharmacists for their life-saving medications,” said Edith Kallas of Whatley Kallas LLC. “We look forward to working with Blue Cross to ensure its mail order program benefits consumers without unfairly targeting its most vulnerable patients and providing them appropriate opportunities to choose what is best for them.”

Download the lawsuit filed by Consumer Watchdog and Whatley Kallas, LLC here.

Anthem Blue Cross Tells Patients Needing ‘Specialty Drugs’ To Use the Mail

1:27 pm in Uncategorized by Consumer Watchdog

Double Cross
In its quest for more profits, Anthem Blue Cross has begun telling patients who have very serious diseases and need so-called “specialty drugs” that they cannot use their local pharmacy where many have long term relationships, but must instead order their life-saving medications from a mail-order pharmacy.

As Los Angeles Times Consumer Columnist David Lazarus recently noted, specialty drugs are used for complex conditions and can cost thousands of dollars a month. Patients suffering from chronic diseases like HIV, cancer, and hemophilia use such medicines.

In the Los Angeles area HIV patients are particularly hard hit by Anthem’s unilateral decision that after Jan. 1, patients needing specialty drugs to treat their conditions must buy them from mail-order pharmacy CuraScript.

In a letter to patients, the insurance giant wrote:

“Using a retail pharmacy will be considered going out-of-network. And your plan doesn’t have coverage for that. So you’ll have to pay the full price of the drug.”

According to Lazarus Jacques Liberman, 57, of Cathedral City received one of the letters the other day. He is HIV-positive and takes a drug called Atripla to help prevent his condition from transforming into full-blown AIDS.

“Who is Anthem to tell me where I have to buy my medicine?” Lazarus quoted him as saying. “Why should I have to buy it from some mail-order company instead of the drugstore that I have been going to for a long time?”

But it’s more than just an in infringement on personal freedom. Patients who need specialty medicines suffer from complex disease that require complex treatment. The pharmacist is virtually a member of the treatment team offering advice and closely monitoring the patient’s condition.

David Balto, a Washington attorney who represents some of the specialty pharmacies, explains the relationship like this:

“Specialty pharmacies, the pharmacies that carry these rare, expensive drugs, build strong personal and clinical relationships with their patients, making sure that they receive the drugs they need when they need them. Most also provide a full slate of advising and counseling services to help patients and their families navigate the challenges of living with a chronic and often debilitating condition. Many specialty pharmacies also have programs to help low-income patients afford their ever rising co-pays.”

Anthem proposes to replace that relationship with an 800 number. Anything for a buck, I suppose.

What’s not clear yet is what can be done to stop this abuse. Consumer Watchdog is investigating. If you’ve been affected by the change please let us know.

Health Law Doesn’t Protect Californians From Rate Increases

2:47 pm in Uncategorized by Consumer Watchdog

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Reporters largely missed the point of a Commonwealth Fund study released this week, that looked at consumer savings under Obamacare’s 80-20 rule, the rule making insurance companies spend at least 80% of your premiums on health care, not overhead.

The authors started with a fact we already knew — that health insurance companies had to pay $1.1 billion in rebates for missing the MLR requirement in 2011 — and that big shiny number distracted the news media. But the authors zeroed in on a much more important fact. Insurance companies successfully reduced administrative costs by $1.184 billion in 2011, but they used those savings to increase profits instead of passing them on to consumers.

Clearly the 80-20 rule isn’t working to contain profits and hold down premiums, especially in states that don’t have tough regulation of insurance premiums.

California Insurance Commissioner Dave Jones launched an audit this week of the state’s largest health insurers to determine if consumers paid too much when insurers were actually saving money and boosting profits. The Commonwealth study found that in California, insurance companies increased profits for individual plans by $88 per member or about $90 million, even though administrative costs went down and every major insurance company imposed rate increases.

These results are more evidence that states need the ability to say no to rate manipulation. Otherwise, insurance companies will keep premiums artificially high to make sure profit numbers stay high too. As we warned HHS Secretary Sebelius more than two years ago:

“In the same way that a Hollywood agent who gets a 20 percent cut of an actor’s salary has an incentive to seek the highest salary, insurers will have incentive to increase health care costs and raise premiums so that their 15 percent or 20 percent cut is a larger dollar amount.”

As Jones said when announcing the audit:

“I have long pushed for the authority to reject excessive health insurance rate increases and this study provides further evidence of why this change in the law is long overdue in California. Health insurers and HMOs continue to impose double-digit premium increases each year and are making larger profits when selling to individuals and families even during these tough economic times.”

Californians will finally have the chance to stop them, by voting at the next ballot on an initiative measure to require health insurance companies to publicly justify rate increases and get approval before they take effect. Learn more at justifyrates.org
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Posted by Carmen Balber, Washington DC Director for Consumer Watchdog and Consumer Watchdog Campaign

Blue Cross Claims Fake Credit for “Free” Care

8:25 pm in Uncategorized by Consumer Watchdog

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When I first noticed the ad below while hunting for cookie recipes, I was surprised to see a health insurance company buying a full page in the first pages of a cooking magazine. But reading it was another surprise. The headline touts “Free Annual Checkups,” and the text of the Anthem Blue Cross ad takes credit for this brand-new benefit: “100% coverage for checkups, flu shots and other preventive services.”

Anthem, however, had nothing to do with the prevention benefit. It’s a requirement of the federal health reforms passed last year. Blue Cross, along with every other major health insurer, fought to eliminate such mandatory benefits and later falsely blamed the law for outrageous, unjustified double-digit premium increases. (The prevention benefit is just one of the things that will disappear if the courts or Congress succeed in voiding the health reform law.)

Anthem must figure a deceptive claim of “free” care will make us feel better about insurance payments bigger than our mortgage.

It’s stunts like this that drive Consumer Watchdog’s efforts to beat back the insurance lobby and regulate untenable health insurance premiums.
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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Obama’s dare to SCOTUS could screw patients and help insurers

4:27 pm in Uncategorized by Consumer Watchdog

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In a remarkable act of either stupidity or brinksmanship, the Obama Administration challenged the US Supreme Court to either keep the federal individual mandate to buy health insurance or throw out with it some of the most important consumer protections in the federal health care overhaul.

The Justice Department argues in a brief to SCOTUS that if the mandate is unconstitutional, then insurance companies cannot be forced to sell health insurance to people regardless of their preexisting conditions or to price their policies based on factors other than a patient’s medical condition.

In other words, give us mandatory health insurance or take from sick patients the right to have access to insurance at an affordable price.

WTF? Has the White House lost its mind?

New York has a system with NO mandatory health insurance, but the very take-all-comers provision and community rating pricing, which excludes price gouging based on illness, that the Justice Department says cannot work without the mandate.Obama advocated for such a system while running for president and distinguishing himself from Hillary Clinton. Now, according to his Justice Department, it’s just not possible?

New York may have high premiums, but so does Massachusetts, which has mandatory health insurance. Both states have recently adopted premium regulation to deal with reining in premiums. Consumer Watchdog’s study earlier this year found premium regulation to be the essential component for health reform to work, not mandatory insurance.

Obama’s attempt to force the hands of a Supreme Court that couldn’t even be shamed out of throwing the 2000 election to George W. Bush seems to be more than legal sophistry. The President seems to have said to himself so many times that mandatory health insurance is necessary for any pro-consumer reform that his Justice Department believed it.

Lower courts have ruled the mandatory purchase provision — which is wildly unpopular with public, unfair without premium regulation and possibly unconstitutional — could be struck from the federal law without losing the pro-consumer provisions. Now the Justice Department just gave the Supreme Court the blade it needed to gut the prohibitions against insurance companies refusing to sell insurance to people who need it most. Read the rest of this entry →

Blue Shield admits to overcharging California customers by about half a billion since 2010

6:27 pm in Uncategorized by Consumer Watchdog

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It is a masterful spin by the self-described not-for-profit Blue Shield of California to announce that it is returning all but two percent of its profits to its customers, as though this were some act of humble generosity. It’s a little like a supermarket announcing that from now on it’s going to give back (almost) all of your change. (It’s actually worse than that, as I’ll explain.)

All told, Blue Shield will have returned about $475 million in profits – $283 million that Blue Shield is crediting back in December plus about $167 million credited back earlier in the year for 2010 premiums as well as the $25 million the company distributed to doctors, hospitals and an as yet unnamed “community investment.” But this should not be thought of as a sincere gift from a community-oriented nonprofit. Rather, it’s nearly half a billion dollars that Blue Shield overcharged its policyholders and then held onto for months.

Worse still, Blue Shield had to be pushed and prodded to do anything; this refund didn’t just happen. Blue Shield is only giving some money back because there was huge public pressure this year – from California Insurance Commissioner Dave Jones, from nurses and consumers who protested at their corporate offices, from lawmakers like Assemblyman Mike Feuer carrying legislation to regulate insurance companies and from news reporters investigating their rates and salaries.

What’s more, the $283 million that will go to reducing policyholders’ December premium payments is utter chump change when given a full context: Read the rest of this entry →

Time For A 1988-Style Voter Revolt?

4:52 pm in Uncategorized by Consumer Watchdog

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The San Francisco Chronicle reported this morning on the front page about the landmark insurance reform we expect to be spending the next fifteen months working for.
Insurance companies, the legislature and recent court rulings have all turned against consumers, much like they had in 1988, when California voters struck back with the toughest insurance reform in America: Proposition 103.
By 2014, all of us will be required to buy health insurance or face tax penalties. The problem is that health insurance companies can charge whatever they like and raise premiums at will in California. This is the same scenario that drivers faced in 1988 when mandatory auto insurance laws forced drivers to pay for policies many couldn’t afford. Voters then required auto insurers to pay drivers a 20% refund and to get permission before they ever raised rates again.
Just like in 1988, insurance stalwarts in the statehouse are now holding insurance premium regulation hostage. The companies have given the politicians millions so they can make billions overcharging you. And, as in 1988, the California Supreme Court has issued several rulings taking away the right of policyholders to hold insurance companies accountable.
If we go to the ballot with a 1988-style 20% rollback in health insurance premiums, will you be with us?
Our “Proposition 103 Part Two” ballot measure will have to be filed by November 2011 in order to begin signature collection so it gets on the ballot for November 2012.
The main provisions of the ballot measure are as follows:
1- A 20% rate rollback in health insurance rates to reverse five years of unwarranted double-digit price gouging;
2- Require health insurance companies to seek permission from the elected insurance commissioner before raising rates, as auto insurance companies must, and application of other Prop 103 protections to health insurance companies;
3- Prohibit all insurance companies from raising your rates or refusing to renew you because of your credit score, claims or insurance history;
4- Allow consumers to join a non-profit public health plan administered by CALPERS instead of having to buy insurance from private insurance companies;
5- Correct court rulings that have misinterpreted the law to benefit the insurance industry;
6- Create a “three strikes and you’re out of California” law for insurance companies that repeatedly violate the state’s consumer protection laws
7- Prohibit health insurance companies from forcing you to sign arbitration agreements as a condition of enrollment.

We want to go to the ballot in November 2012. Will you be with us? Click here to sign up!
Together we can move health care reform forward in California and America.
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Jamie Court is president of Consumer Watchdog and author of The Progressive’s Guide To Raising Hell.

Tracking, for Profit, Whether You Take Your Drugs — How Wrong Is This?

8:34 pm in Uncategorized by Consumer Watchdog

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FICO, the company that decides your credit score, is now predicting, for profit, whether you’re likely to take your prescription drugs on schedule. No matter why FICO says they’re doing it (insurance companies are their obvious clients) this is wrong in so many ways that it’s hard to know where to start.

For one thing, information wants to be free: Your health insurance provider or doctor group won’t be the only companies that see your “FICO prescription drug adherence score.” In some cases, your employer is effectively your insurer, and could hardly be denied access to your drug score. If you’re tagged as at risk for not taking your insulin, you might be out of the running for a promotion.

Want to know if FICO is tracking you or what your score is? FICO won’t tell you. Call your insurance company or doctor, they say. Want to know exactly why they think you’re a risk? FICO won’t tell you, and probably won’t tell your doctor–it’s a proprietary algebraic formula. Want to protest your score? Good luck.

Insurance companies swear they only want to be able to remind high-risk patients to take their medicine, and that they won’t use the information to hike your health insurance premiums. However, the score would be even more attractive in deciding whether to deny you treatment if you’ve been disobedient, even if you just couldn’t afford your drugs.

FICO also apparently intends to sell your scores to pharmaceutical companies so they can sell us billions of dollars worth of more drugs. From FICO’s press release:

The FICO Medication Adherence Score provides valuable insight to pharmaceutical marketing teams that until now has not been readily available,” said Eric Newmark, Research Manager at IDC Health Insights. “Considering that non-adherence to prescribed drugs is estimated to cost the pharmaceutical industry more than $35 billion in lost revenue annually, the FICO Medication Adherence Score can offer great value for marketing optimization and insight into ways to improve patient health. The solution is likely to drive synergies in other investments as well, such as remote patient monitoring and better ‘connected’ Medication Adherence.”

Once the information exists, promises about how it will or won’t be used aren’t binding.

Even the way the score is created is questionable. From the New York Times:

The score was created using data from a large pharmacy benefits manager that provided information for a random sample of nearly 600,000 anonymous patients with diabetes, heart disease and asthma. Using the data set, FICO was able to track the patterns of patients who filled and refilled prescriptions and those who didn’t. The company used the data to identify the variables most associated with medication adherence and developed a risk score on a scale of 0 to 500.

Now, to identify your personal risk of falling off the drug wagon, FICO matches “publicly available” data like your neighborhood, your employment (or not) status, age, sex, marital status and home ownership with the data about the original sample of 600,000 (for which they knew who adhered to their prescription drug schedule and who didn’t). Exactly what FICO looks at is secret, as is their formula for developing the score. FICO doesn’t have to reveal whether it is accurate, or to what degree. And the score is really never better than an informed guess.

Drug companies have been seeking information on your “drug adherence” for years. They say it’s only so they can send reminders. But they’re already using it in a few places to try to sell you more and different drugs. They might also be sending you reminders to take a drug that your doctor has advised you to stop, because of side effects. Consumer Watchdog helped stop the drug companies from using this scheme in California and other states have also rejected it. But now Big Pharma has your FICO drug score, and so does the rest of the medical-industrial complex.

Why would insurance companies pay FICO gobs of money for this information, since it’s far less accurate for any individual than just checking whether they are refilling their prescriptions under their drug coverage? Ostensibly the FICO drug score would be cheaper than actually checking individual records, and would let insurers call and monitor the high risks (scores under 200) without bothering the rest of us.

But combining secrecy and profit with your personal information is a recipe for misuse. Especially when it has anything to do with your health.
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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.