Archive | October, 2009

To pay or not to pay

24 Oct

 

Pharmaceutical companies, health insurance companies, public utilities, airlines, oil companies, defense contractors; I’m betting someone could make the case to limit or otherwise control executive salaries in all these industries because in one way or the other they affect the public interest with little in the way of competition for the end consumer. While there is no question that there are overpaid executives and that many pay for performance schemes reward for less than stellar performance or create the wrong incentives, what’s new?

The precedent of the federal government setting pay limits and determining the form of compensation is not a good idea. In the current scenario, we are told that a large part of compensation will be in the form of stock. It seems to me that rewarding in the form of stock creates strong incentives to keep the price of stock high and growing. Do the terms insider trading, backdating options, fudged earnings reports ring a bell?

Undoubtedly, many Americans are cheering this move by government. After all, who doesn’t want to get even with the guys who created a financial meltdown? The way a person is compensated may be relevant to the avoiding unwise risk, how much a person is paid is quite another matter. The rationale for limiting pay for those organizations who received government money as a bailout is questionable, who doesn’t receive a bailout from the federal government?

If you take $8,000 to buy a new home, should the federal government tell you what kind of changes to make to the home? If you take a bail out to buy a new car, should the federal government tell you where to buy your auto insurance?

I know, I know it’s not the same, a ridicules comparison, oh really? We are heading down a slipper slope that may feel good now, but has serious implications for the future especially in the hands of politicians who are experts at rationalizing.

I think a college education costs too much and has been rising at twice or more the rate of inflation, are professors and college presidents paid too much? Who holds them accountable?

Cut; don’t cut, keep what you have, but it is changing, forget what I said in that townhall meeting

23 Oct

 

A recent Wall Street Journal article relates the status of Medicare Advantage Plans, you know those plans in which eleven million Medicare beneficiaries are enrolled and will be allowed to keep under health care reform. 

Well, even before we get to reform, premiums are going up 25%, 400 plans are being dropped and seniors out of pocket costs are rising or going down depending on your plan and point of view. To CMS’s way of thinking requiring a plan to lower cost-sharing is a benefit, that is if the premiums don’t go up to do so. 

These rising costs and disappearing plans are before health care reform cuts an additional $100 billion to help pay for expanding coverage for others.   

I need an asprin or something covered by Part D

I need an asprin or something covered by Part D

Under Medicare doctors are paid too little (which must be the case since Congress wants to block fee reductions) and alternative plans are paid too much (amounts previously determined by the government) and yet Medicare is our model of a well run public option. 

If you were a senior somewhere in America and you are in a plan that allows you much lower out of pocket costs than standard Medicare and you now are told, that plan will not be available in 2010, or your premiums are going up 25% or you will now have premiums when non-existed, what would you think?  CanI trust these guys?

Clearly, we want the government to be efficient and not to over pay for anything, but where have they been all the time these overpayments were accumulating? Why does Congress block cuts to physician fees year after year, if it did not mean it when the legislation was enacted?  Why are payments to some plans too high and yet Congress seeks to block scheduled premium increases for standard Medicare when those premiumns are too low?

 

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Do you have five bucks to spare?

22 Oct

Once again I am honored. This time by the Vice President of the United States.

Look who is accusing who of lies, scare tactics and deceptive ads.

Richard–

We’ve got a fight on our hands. Powerful insurance companies are pulling out all the stops to defeat the President’s plan for health reform. They’re spending seven million bucks a week on lobbyists, blanketing the country with deceptive TV ads, and just funded two high-profile “reports” to distort what reform would mean for you.

I know their game. I was in the Senate the last time health reform came around, and I saw the special interests savage our efforts. Frankly, under the old rules of Washington they were nearly impossible to beat. But now, thanks to you, the rules are changing. All the lies, scare tactics and lobbyist shake-downs in the world are no match for the incredible work of Organizing for America supporters like you. That’s exactly what frightens them so much — and it’s what Barack and I are counting on.

After decades of false starts, we’re now just a short time from finally passing real reform. Every member of Congress will soon have to cast their vote. As real change draws near, you can bet the insurance companies will hold nothing back. That means OFA will need the extra resources to beat back whatever attack they can dream up next. Here’s the bottom line: it’s not time to let up — it’s time to double down.

Please donate $5 or more to power OFA’s fight for change as we head into the final round.

When I talk about you changing the rules in Washington, here’s what I mean: This week, crucial negotiations on Capitol Hill are shaping a comprehensive reform proposal. At the same time, the insurance companies’ phony reports are grabbing headlines and their lobbyists are twisting arms. But your work is keeping them from setting us back.

On Tuesday, OFA supporters around the country organized more than 1,000 local outreach events and generated an astounding 330,000 calls to Congress from constituents telling their representatives that “it’s time to deliver.” From my years in Congress and my conversations with Senate colleagues this week, I can tell you with confidence that your message broke through and you helped keep us on track.

If this fight were only about guaranteeing the choice of secure, quality, affordable care for every American, it would be worth everything we could throw at it. But as Barack reminded us this week, this fight for change is now about something even bigger: a test of whether or not “we as a nation are capable of tackling our toughest challenges, if we can serve the national interest despite the unrelenting efforts of the special interests; if we can still do big things in America.”

I believe we can. And Barack believes we can. But what really matters is whether you believe we can. If you do, now is the moment to make it happen. Please contribute today:

https://donate.barackobama.com/FinalRound

Thank you,

Vice President Joe Biden

I wish I were wrong in this somewhat negative assessment of the current state of affairs, but my experience, history and even a touch of common sense tell me otherwise.

22 Oct

 

As we continue the rush toward health care “reform” – a misnomer in the making, perhaps it is time to recap where we have been.  Frankly, I am a bit confused myself. After reading so many versions of this concept, participating in numerous conference calls and meetings and speaking with the staff of a dozen members of Congress, I can’t remember who told me what, but I do remember they told me conflicting “facts” and they were all Democrats.

Yes I remember now, they all told me they were going to save the Country from certain crisis if health care costs were not controlled, but they were unclear as to who was going to benefit.  On the other hand, I have been hearing that same song since 1978 or so and I am still waiting for that universal health care ID card that Bill Clinton held up in his first State of the Union speech.  However, I must admit that when GM lamented over the $700 per car that represented their health care costs back in the 1970s they were on to something, but they too failed to do anything to correct the problem and you know who ended up paying for that.  One has to wonder if nobody can fix a problem, is there a problem to fix?  Perhaps Americans like paying a lot for what they believe is good health care.

From the start, the health care debate has been more about expanding coverage to the uninsured than truly reforming the health care system.  In fact, along the way, the debate became reforming health insurance and as I write this, the insurance companies have managed to make themselves the villains again drawing the rath of the White House before providing Pelosi and friends more fuel to push a public option. 

Competition among who, could it be among health care providers? Nah, that would be too logical

When there is talk of saving money is it about the federal budget, when there is talk about making something affordable it is about subsidizing premiums to lower the cost to the individual or expanding Medicaid.  Even when there is talk of changing the system, such as comparative effectiveness studies it is in the context of Medicare.  The Senate Finance Committee bill calls for a new Medicare panel to manage costs without lowering benefits or cutting payments.  Translate that to some form of rationing as that is the only option left.

If you among the people who believe that we can have all what we want, when we want it and that any expense can be justified in some manner, I ask you to simply take a look at the federal and state budgets, the deficits and the collective taxes you pay.  If you like what you see…stop reading Quinnscommentary.com

Members of Congress and large segments of the population see insurance premiums as the cost of health care and the cause of our woes.  In fact, premiums reflect true costs not the other way around. Large emploeyrs, including state govenrments are seeing double digit incrases in their health care costs for 2010 and they don’t even use isnruance companiens…how can that be, no CEO pay to blame and costs still out of control?  Ask Nancy.

When there is talk about the need for a public option, the failures of Medicare are ignored.  In fact, one commentator recently noted that Medicare “our most successful public option, is going broke”.  GM was successful too, until it went broke.  Again, we define success in health care reform as coverage for more and more people.  I am not sure that is all we are looking for.

My point is that we are missing the point.  We should be talking about the ills of fee for service medicine, the incentives to render more rather than the most efficient (or best) care, and the lack of clear definitions and application of quality health care. We should be curtailing the advertising in health care services that misinform and encourage utilization, the practice of defensive medicine and many of other real issues largely ignored by Congress in large part because they fear losing political contributions.

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Public Option far from dead, be careful what you ask for

21 Oct

Right, wrong, indifferent, it doesn’t’ seem to matter, the liberal Democrats are going after a public option based on Medicare and amazingly the numbers seem now to work, relatively speaking of course.

Those of us standing a bit right of center just don’t get it.  Our amazement over the fact that some politicians and many Americans want to see more beaurocracy, larger obligations of the Federal government and the taxes to support it all is never ending.  I am incredulous hearing that people generally don’t get the health care issue, but are more comfortable blaming the insurance companies.  A few bad experiences dealing with some incompetent customer service rep or overzealous claims manager can do that, but when compared to dealing with a federal or state bureaucracy, it pales in comparison.  On top of that, what federal or state program is well run over a long period or comes even close to meeting budget or is not tinkered with by every successive Congress or legislature?

Does the average person who supports a public option really think that the plan will pay whatever is ordered, not apply medical necessity standards, ration care in some form or not quickly become underfunded?  Do they think that the taxes to support all this will not rise continuously?  How do they think such a plan will control the rate of health care inflation once all the profit is driven out of health insurance?  What do they think will be the consequences of a public option paying providers Medicare rates for millions more Americans?

Be careful what you ask for, you just may get it.

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Here comes the cash flow

21 Oct

 

It is being reported that Wall St bonuses are up 40% and billions of dollars are being paid out. I can just hear the Schumers and Rangels of the world bemoaning such extravagance.

Ok, boys I'm first in line

Ok, boys I'm first in line

On the other hand those billions are taxed at the local, state and federal level, they go to charities and they go to buy stuff (after all the BMW dealer has to eat too), yikes they even go into PACs.  I know of at least some of it that may go to buy a home.

By Jove this is real economic stimulus and it didn’t even add to the deficit.   I calcualted that these payouts will create or save 500,000 jobs (ok, I made that up but I am at least as accurate as the administration don’t you think?).

A year ago we were ready to organize a Walk for Wall Street and now they are helping us out of the recession one new purchase at a time.

They make money the old fashioned way…They earn it!

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Getting down to the nitty gritty

21 Oct

 

Health care reform of any kind is a complex issue and there are very few people in or out of government who understand what is happening, the probable unintended consequences, the impact on various groups and the long-term consequences for the winners and losers, and there are losers, in all of what is being proposed.  To give you some insight into what is being assumed, and the possible implications, I have copied key sections from the CBO report on the Senate Finance Committee legislation.  I have added the bold text to emphasize those areas I believe of special interest and significant consequence. 

Note especially the last sentence of this excerpt.

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How do they do that?

20 Oct

The Democrats in Congress are trying to make a deal with the AMA (and ostensibly all doctors) in that they will prevent cuts in Medicare payments to physicians in return for physician support of health care reform. 

Let’s think about this, Medicare is going bust, but to get reform we can add $250 million to the cost by not following a 1997 law that lowers physician payments.  At the same time health care reform is going to control costs and improve the quality of care, and be beneficial to doctors to the extent they support the current versions. 

If health reform has any chance of lowering costs, making health care affordable if you will, and of improving the quality of care, such reform must directly affect physicians and the rest of the health care system.  That is, fee for service practice must change, overcharging and self-referrals must change, the use of tests must be better defined and monitored, etc.  In short, health care must be more efficient and in some way physician income must be affected, especially going forward. 

So, which is it, is health reform business as usual for doctors or is it changing the health care system to achieve the stated goals? It can’t be both. 

West Wing solution session

West Wing solution session

But wait, according to Nancy Pelosi, it is no longer health care reform, it is health insurance reform.  Now it’s clear to me, we lower the profitability of health insurers and in the process we improve the quality of health care and lower the future rate of health care inflation.  

Of course, what was I thinking?

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It is outrageous the way my insurance company treats me.

20 Oct

 

First, they raised my deductible every year for the last three years because apparently I pose a greater risk.

Then I have to pay a higher premium just because my blood pressure it up a little. They also raised my rates because I had bad experience in one year and that was after I paid an extra premium because of the bad experience I had before I got the policy.

If that were not enough, I know a friend of mine who is paying more just because of his age. 

A few years ago, my coverage was actually dropped because of a few large claims and I had to find another insurance company.

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Hey, it’s all coming from the same pot

19 Oct

 

Let us see if we can get this right, for 2010, there is no increase in Social Security benefits, and  Congress is considering legislation to stop the scheduled increase in Medicare premiums.  Inflation is low so there is no increase in Social Security, but health care inflation is high so there should be no increase in Medicare premiums despite the fact there failing to increase premiums in 2010 will add to the Medicare financial problem and may cause higher increases in subsequent years.

More Congressional math. 

Sooner or later they are coming home to roost

Sooner or later they are coming home to roost

It seems to me that a 5.8% increase in Social Security in 2009 should be good enough for two years at a time when there is virtually no inflation and workers are seeing no pay increase or worse.  On the other hand, I have been unable to convince my wife who is receiving Social Security of my logic so I suspect the AARP has the same problem.  We seniors are a greedy lot. 

Now, because there is no inflation the amount you can place in your 401(k) or receive from a qualified pension plan is not increasing either from 2009 levels. This should not matter much as pensions are disappearing, people are not getting raises, they cannot afford to save and probably are not motivated to save because their employer match is gone from the 401(k) as well.   

However, my favorite is the pending legislation that will stop the cuts in Medicare payments to physicians (again) to appease the AMA while adding to the deficit to the tune of a quarter billion dollars or so.  Now, to avoid confusing us Congress insists that this is not part of health care reform so the planned “saving” from Medicare of $404 billion are unaffected by spending half of it.   

Hey, it’s only money…yours.

 

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How do YOU spell success?

17 Oct

In an article in the WSJ (10-16-09) titled “Democrats Don’t Need a Public Option, Al From, founder of the Democratic Leadership council, writes about the ills of the health care system including health insurance is too costly, there is insufficient competition, too many people lack coverage, etc.  In addition, he writes this, “And our most successful public option-Medicare-is on the road to going broke.”

Funny, but I don't feel successful, maybe I should get sick.

Funny, but I don't feel successful, maybe I should get sick.

And our most successful automobile manufacturer has gone broke.

Here we go again, if it is not blaming the insurance companies for every health care problem, it is defining success as covering a large group of people in a costly, inefficiently run program that is “going broke.”   On the other hand, we also define home ownership as a right even if you don’t have the money for even a modest down payment and we define the ability to afford something as the ability to charge more on your credit card.

If there is any doubt what the current quest for health care reform is all about or the likely consequences, there shouldn’t be.  If this legislation passes, a few years it will be defined as our most successful legislation in two decades, and America is on the road to going broke.

 

 

 

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Pelosi shows they really don’t get it

16 Oct

If you have any doubt what health care reform is about or that our politicians have no idea what the problem is or how to solve it, consider the following quote:

“It is absolutely clear that it is an unsustainable situation as we go forward, and it is well known to the public that the health-insurance companies are the problem,” Pelosi told reporters Thursday.

This attitude even if it is a show to lash out at the insurance industry’s recent attack on health care reform makes it very clear that any hope of actually managing health care costs or improving the quality of health care is an illusion.  The main objective of House and Senate Democrats is to expand coverage and to do so by adding to the Medicaid rolls and by ever growing subsidies to other lower income Americans.  That may be a noble goal, but it is one that will get us into bigger trouble down the road if not coupled with true reform of the health care delivery system along with American attitudes toward receiving and paying for health care (that is not happening now). 

What will happen to these subsidies as the cost of the underlying health care provided continues to grow at double or more the rate of inflation?  Just look to Medicare for the answer. 

Health insurance companies are not the problem any more than property and casualty insurance companies are the problem causing high premiums in hurricane prone parts of the country.

Harry, Nancy, Chuck, Charlie, Robert, Max please pay attention

Harry, Nancy, Chuck, Charlie, Robert, Max please pay attention

While the House and Senate are debating this massive legislation, the Senate will also begin debate on separate legislation to block Medicare from reducing payments to doctors.  The payment process was approved by Congress ten years ago.  If the change is approved and payments are not lowered, the cost over ten years is $247 billion.  The Senate Finance Committee version of health care reform assumes $404 billion in cuts to Medicare over the same ten year period.

Does a liberal education mean there are no math classes?

 

 

 

 

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Walking through the pages and creating history

15 Oct

 

Let’s take a walk through today’s newspaper and see what there is to see.

debt_text_grinding_up_wages_to_pennies_lg_clrFirst I see an article about the US deficit dilemma. We see that the deficit this fiscal year is about $1.4 trillion dollars or 9.9% of GDP, bigger than any year since 1945. Of course the current administration blames the previous administration, things like cutting taxes, the wars and the Medicare drug benefit (a benefit by the way that is being significantly improved in one of the pending health care “reform” bills before Congress). Check out the current status of the US debt  for yourself.

Moving on we find an article about the earmarks Congress has placed in the budget under the guise of stimulus and anything else it can think of. What’s a million here or a million there? New Jersey Congressman for example, have added $1.5 million for new air conditioning for the Newark Museum, their logic being that it will be a model for energy efficiency and that it will continue to make the museum’s collection available to the American public. Have you been to the Newark museum lately (or ever heard of it)? I live within five miles of the museum and have for over 65 years and have never been there. Rationalization is easy…and expensive…for you.

Then we find that CAlpers the California pension fund is under scrutiny for the high investment fees paid to one of its own board members. This is but one example of the questionable management of pension funds at the state level. Keep in mind that under health care reform the states will operate large segments of the program and continue to regulate health insurance companies.

Next up is a report that President Obama is pushing for a $250 payment to all those receiving Social Security because the legal formula will not provide an increase (because there is no inflation). But hey, its economic stimulus and if they get the $250 they won’t be able to get another $250 if they install a new water heater through another stimulus plan next year. No plans yet where the $13 billion is coming from. It would be far easier for us seniors to just ask our grandchildren for the $250. OMG is this a bribe to us seniors so we don’t rise up when we lose our Medicare Part C option?

Last up on our journey is an opinion piece on health care reform pointing out (correctly) that the math and budget maneuvering to make it “affordable” is (as I have said repeatedly) smoke and mirrors. Judge for yourself. The cost is figured on a ten year basis, tax hikes and benefit cuts (mostly lower payments to providers under Medicare) go into effect in 2010, but the additional spending is not effective for another three to five years. The CBO also assumes that employers who shift workers to the new insurance exchanges will replace that cost by raising the workers pay and thus generating additional income taxes. Then we have the assumption that the tax on so called Cadillac health insurance plans will raise additional man_laughing_at_you_lg_clrmoney and grow in the future, an assumption that requires insurance companies and employers to continue to offer such plans and pay a 40% excise tax. Don’t forget to send in your voluntary additional income tax payment next April.  Finally we have the cuts in Medicare payments, cuts that Congress in the past has blocked but now we have the assumption they will go into effect and stay in effect for the next ten years. At the same time there is already talk of legislation to prevent them from going into effect in 2010 because of the growing number of doctors who will not take Medicare patients.

I remember something called the new math and as I recall I was never good at it. I’m still one of those 2+2 = 4 guys. Somehow we elect people who are expert in Congressional math which calls for 2+2 to equal -1. If this wasn’t so serious for future generations if not our country, it would be funny, but it is not funny, not funny at all and we all participated in electing these boobs and more often than not reelecting them too.

 

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“The ugly truth though is that the 401(k) is a lousy idea, a financial flop, a rotten repository for our retirement reserves”

14 Oct

 

Writing in the October 19, 2009 issue of Time ® “Why It’s Time To Retire the 401(k)”, Stephen Gandel writes “The ugly truth though is that the 401(k) is a lousy idea, a financial flop, a rotten repository for our retirement reserves.  In the past two years, that has become all too clear.” 

Is that how you feel? 

I guess I didn't need that fishing boat anyway.

I guess I didn't need that fishing boat anyway.

This story is largely based on the experience of several retires from a company that terminated its pension plan twenty-six years ago and replaced it with a 401(k) plan.  Clearly we would all like to have a pension plan, Social Security and other savings when we enter retirement.  We would also like to be mortgage free, but that is not the real world in large part of our own doing. In short, millions of Americans are better with the 401(k) than without it. 

The fact is that a majority of Americans never had a pension plan even before the idea of a 401(k) was popular; one of the reasons we have IRAs.  The remaining bastion of the defined benefit pension is among government workers. At the state level pensions are generous and expensive, and many are in serious trouble with their funding. And for the taxpayers, they are probably unaffordable as well. 

The current gripe with the 401(k) is that it is subject to Hamlet’s slings and arrows of outrageous fortune.  Ok, we get it the market goes up and the market goes down and sometimes at inopportune times.  On the other hand there are steps people approaching retirement can and should take to mitigate that.  My own 401(k) plan is worth more today then it was a year ago.  I’m not an especially wise investor but I do know enough to put a good chunk of my funds in less volatile investments in the years before retirement and during retirement and I also know enough to keep plowing money in while the market is low.  And as for keeping up with inflation yes, you do need to plan for that and that means you have to start out with more money than you think you will need so you have a cushion.  But that issue is not unique to those dependent on a 401(k) plan, the vast majority of pension plans (government being the likely exception) do not have cost of living adjustments built in while the cost of living adjustment within Social Security is one of the main drivers of the coming meltdown of that system.  

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Not for nuttin, what’s new?

13 Oct

 

While one can question the timing for the perception it creates, the insurance industry finally laid out some facts on what health care reform will mean to those of us with health insurance.  Not for nuttin, but I have been saying the same thing for a few months now.  I can’t verify their numbers and neither can anyone else ten years into the future, but the concept is sound.  Simply put, the pending legislation will not lower health care costs and will raise them for those with insurance. 

Com'on, your out of pocket costs are lower aren't they?

Com'on, your out of pocket costs are lower aren't they?

Responding to the report, the White House said it is inaccurate because it fails to consider that tax credits and limits on out of pocket costs will lower costs. 

Heellooooooo, tax credits have nothing to do with the cost of health insurance and if you lower out of pocket costs, you raise premiums.  The failure of politicians to understand how health care and health insurance (or any insurance) works should tell you something about how this legislation will control health care costs. 

The fundamental problem we have is that politicians speak politician and the rest of us even after 250 years don’t get it.  It’s like being in France.  When a politician talks about saving money they are talking about the federal budget, they are not talking about the average American who funds the budget.  Also, whenever the politicians do lower one element of the budget (in the case Medicare), the find a way to spend the savings somewhere else (in this case expanded Medicaid and tax credits) and thus there is not only no gain for the budget, there is typically an additional deficit. 

 

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