Archive | October, 2009

The disappearing flexible spending account

31 Oct

Health care reform is not all positive. The understatement the century. For example under both the House and Senate bills the flexible spending account will be limited. Currently the limit under both bills is $2500 per year. The Senate version is effective 2013 and the House 2011. While the average employee contribution is not more than that amount, there are many workers who will plan to use more in their account for a specific purpose such as a child braces. In addition, companies offering high deductible health plans often encourage workers to use an FSA to better manage their out of pocket costs.

2010 may be the last year to take full advantage of the flexible spending account.

Applying for Social Security, are we having fun yet?

30 Oct

Now that's out of the way, I'm back to my Twitter account

Government in action 

Being the tech obsessed person that I am, I recently applied for my Social Security on line.  Frankly, it was easy.

About a week later, I received a call from a representative of my local Social Security office.  She left a message that she had some questions and few things needed to be cleared up….oops.  I called and left a message.

As promised, she called me back right on time, 8:00 am to be exact.

She said there was a problem with my name, apparently when I applied for my original Social Security card 50 years ago I did not add the 3rd on to my name which is my legal name.  They could not go forward I was told until this was corrected and that I would have to bring my birth certificate to the office to prove I was in fact the 3rd.  Ok, no big deal.

We then talked about the effective date of my benefit, which appeared as October.  She asked me why I selected October on my application as my full benefit birthday was in November.  I informed her that I did not select October, but rather checked the box on the Web that said, “Earliest month possible without an age-related reduction.”  The system put in October and I thought I was going to get an extra months benefit, silly me.

She noted that my wife was already collecting a Social Security benefit but probably wanted half of my benefit instead of the amount on her own earnings.  I said sure but since they already had all the info on my wife, I thought the change would be automatic.  Oh no, she has to apply for that benefit, I was told.  Ok, so how do we do that?

“We can do it now if you like, you can apply for her.” The nice woman said.  “Eh, well sure let’s do it.”  “Where were you married, when where you married, are you still married?”   Yup, sure am and I even remembered my anniversary.  I didn’t bother to tell her all that information was provided on the form I filled out online the week before. Ok, that’s it.

We just have to clear up your name.  I happened to mention that sometimes I use the 3rd and sometimes I don’t.  “Oh,” she said you do not care if the 3rd is on your check (actually direct deposit)?  “Not one bit,” said I.  “In that case you don’t have to worry about the birth certificate.”  Yikes, more red tape avoided.

“You checked that you don’t want Medicare Part B, are you still working?”  “Yes, I am.”

“You didn’t indicate if you are enrolled in a group health insurance plan.”  Actually, I did check yes to still working and enrolled in group health benefits and my printout of the online application shows both.  Has the Social Security system caught the H1N1?

Finally, I asked about the income tax withholding form I had completed.  The instructions on the form say to mail the form or bring it to the local SS office. Can I just drop if off on Friday I asked?  “You don’t have to do that just tell me what percentage you want withheld and I will take care of it.”   Now we have circumvented the IRS procedures as well.  I’m in bureaucratic heaven.

So that’s my tale, the lady representing Social Security was very nice, very friendly, very helpful and so far as I know very efficient.  Thank goodness for that, because apparently the system is not sure what it is telling people or what it is doing.

Oh, how I dread that first Medicare claim…However, I suspect I can’t file on line.  Actually never filing a claim would be just fine.

We will have other legislation

30 Oct

If you like the House health care legislation or even if you don’t it matters little, there will be endless amendments in the future with each succeeding Congress.

Here is what Nancy Pelosi told

“‘We are not passing a bill, shutting the door, turning out the lights and walking away. We will have other legislation.’”

There you go, before the ink is dry they are thinking of changes. Hey guys how about solving some real problems like the deficit, Social Security, Medicare and I don’t know just pick one.

Home purchase credit – questionable idea at best

29 Oct

Sen Dodd proposes extension of the $8,000 tax credit for first time home buyers.  The idea is to stabilize the home market, but why?

According to an ad by the National Association of Home Builders and the Nat’l Association of Realtors such an extension will:  create 350,000 new jobs, inject $28 billion into the economy and generate $12 billion in additional tax revenue.  No doubt it will also find a cure for obesity as well.

Housing prices are still too high, why do we want to prop them up? Historically a house costs about three times average income, you do the math. Today even after the decline in home values over the last year or so, the average price of a home in many parts of the country is far more than three times average income. My home has dropped in value in the last year, at one point it was worth nearly $700,000 today it is closer to $550,000 or so.  Did I lose money, that depends on your point of view, I paid $59,000 for the house in 1975. 

Wouldn’t it be more logical to allow prices to decline so that a home is more affordable to more people and not just some first time home buyers?  Where is the logic in giving people money to buy something for an inflated price as opposed to a strategy that lowers that inflated price?  Didn’t we get into this recession mess in part because we made it too easy to buy a home, no down payment, “creative mortgages” stretching our budget because the price of the home was so high?  The idea that we need to artificially prop up home prices to sustain the home equity built up in these homes is also questionable.  Clearly that is a long term goal for homeowners, but in the short term it is an often misused asset as many Americans have recently learned.

Stimulating home buying in the short term for a select group of Americans may seem like a good idea today, but at what price?  Do we want to add to the deficit, keep home prices over inflated and create a false sense of entitlement to those who want buy a home?

Would a long term strategy to assure that all Americans who can truly afford a house are able to obtain one at a realistic price and with a traditional long term and fixed payment mortgage?

House Health Care Reform

29 Oct

I have just finished reading the section by section summary of the House reform bill released yesterday.

Here is my summary:

Plenty of insurance reform (leading to higher costs for those currently insured)
A tremendous amount of new regulation
Scores of new programs, studies, pilots, etc on everything from wellness to obesity and much more all under HHS
Many improvements to Medicare and Medicaid
Higher costs for employers including prohibitions on changes in retiree coverage, extension of benefits to adult children and more
Control of just about everything including the adequacy of provider networks
Gradual elimination of the Part D donut hole

In summary this is a massive piece of legislation that will require even more massive regulation and years to implement. In the final analysis it will be virtually impossible to know what worked or didn’t work and certainly with all the additional work left to the Secretary of HHS and to CMS it’s fair to say we will never know the true costs (or savings).

Bait and switch Congressional style

29 Oct

Now it is reported that Pelosi will send to the floor a bill with a public option that calls for negotiated rates rather than using Medicare rates for payment to health care providers.  Interesting start, but one can only imagine what will happen a few years after enactment when costs are still rising…does Medicare ring a bell?

However, you don’t even have to wait that long, to keep under the target cost projection the bill will also expand Medicaid,  this is what The Hill says about that:

“The negotiated rates plan is estimated to cost about $85 billion more than the Medicare-based reimbursements. To cut the number of uninsured without surpassing the $900 billion limit set by Obama, the bill will expand eligibility for the Medicaid health care program for the poor. The bill will also include an income surtax on the wealthy to pay much of the cost of the plan.”

I think they used to call that bait and switch.  They draw you in with a too good to believe sale and then sell you something else.  So, now the $85 billion is off the books for federal health care reform, but shifted to the states through expanded Medicaid.  Now you see it now you don’t.  And by the way, Medicaid costs money too.

As Margaret Thatcher said, the problem with socialism is that sooner or later you run out of other people’s money.

Exceptional performance- government style

28 Oct


Pay for performance is in the news a great deal these days, but did you know that the federal government also has a pay for performance program?  Career senior executive service personnel are eligible for a bonus based on the previous year’s performance of 5% to 20% of base pay.

Of course, there is inherently nothing wrong with such a system, good performance should be rewarded especially in government service.  Too bad we can’t annually evaluate members of Congress.

On the other hand consider this; nearly 50% of the employees eligible for awards receive the highest possible performance rating each year.  In other words, they are “outstanding.”

Here is some detail:

2005 = 43.4% highest rating

2006 = 43.4%

2007 = 47%

2008 = 48.2%

Office of Personnel Management Annual Report 

man_laughing_at_you_lg_clrThe normal distribution for such an outstanding rating would be 10% or less, some companies, knowing the tendency for generous performance evaluations, even limit the number of possible top rating to no more than 10% or less.

In a normal organization, one would expect that the majority of workers would be in the average range. Apparently, we have one heck of an exceptional group of government workers (or one lousy bureaucratic performance evaluation system).

Telling people the whole truth about health care reform would be refreshing

28 Oct

I am not an economist, in college I was so adept at statistics the professor saw to it that I took the course twice, but I do know that if something is free, somebody somewhere is paying for it.  I do know that if you buy something with borrowed money you have to repay it or suffer the consequences and I know that if you take from one place to give to another there is somebody who comes out on the short end of the stick.  Therefore, I apparently know a great deal more than members of the Congress of the United States. 


Trust me, you are going to save money and we are going to stick it to the insurance companies

A new multi-state study by Wellpoint (yes, I know they are an insurance company) demonstrates what many of us have been saying (using only common sense), and that is that for people who have health insurance now, the cost of that coverage will go up, in some cases significantly, under the planned health care reform.  That is because of mandates, new underwriting standards and age based premiums, etc.  Perhaps that is the price to pay for reform, but let’s tell people the truth. 

Also, buried within the reform legislation is an expansion of Medicaid, the state-run health insurance for low income Americans.  What you don’t hear is that much of the financial burden for expanding Medicaid falls on the states many of which are already struggling with budget deficits, but in any case more state obligations must mean higher taxes for citizens and or higher deficits or cuts in other programs. 

Hard choices are surely required in any reform effort, but at least tell people the full story.  The simple fact of course is that politicians don’t trust the public with the truth.  In private some staffers in Congress will tell you that.  I have to admit that listening to some individuals’ view of health care and health care costs, politicians may have a point.  None the less, this is a big, big deal and we need to let people know what they are in for, those with health insurance and those without.

Krugman makes it clear

28 Oct

In his October 25 column in the NYT Paul Krugman makes the case for health care reform and in part uses the Massachusetts experience as a model to expand coverage.  “He concludes that this thing is going to work.”

“This thing” presumably is the expansion of coverage to more Americans and in that he is probably right.

But shouldn’t this thing be actual reform of the health care, not the health insurance system?  Should we be seeking to truly reduce costs and lower the rate of future growth in costs while raising the quality and efficiency of health care?   While there is a great deal of rhetoric attributing quality and affordability to the various pieces of legislation, the truth is there is little of either.

Krugman got something else right in his assessment of the expansion of coverage effort in Massachusetts, as he said,  “And the Massachusetts plan hasn’t yet done anything significant to contain costs.”

Surprise, surprise

“The next chapter”

27 Oct


The Massachusetts example 

What is happening at the national level in part mirrors the Massachusetts experience with health care reform.  So what has happened in MA? 

It’s quite simple, more people are covered by health insurance and costs continue to go up at a rate many times inflation. 

I really do like MA

But keep in the mind the objective of the reform.  According to Michael Widmer of the Massachusetts Taxpayers Foundation, “Virtually all stakeholders involved in the passage of the 2006 law understood that its principal intent was to achieve near universal access, and that the next chapter would be to deal with escalating health care costs.”  In fact, premiums in Massachusetts are expected to rise 7% to 12%.   

Some would argue, including apparently most members of Congress, that this is ok; the goal is to get people covered.   This is certainly an easy to swallow short term goal and relatively easy to implement. The problem is “short term”  is not the concern; it is what happens next that we should be worrying about.   In my view the next chapter should be the first chapter.

Medicare provides universal coverage for those of us over age 65, Medicare is also one of the major causes for the federal deficit and will have to be dealt with very soon which in turn will cause, well who knows, higher taxes, more debt, a cut in benefits or all three.  In short, a greater portion of available resources to sustain uncontrolled costs, a situation by the way not unique to the United States. 

The questions we should be asking is who is better at controlling health care costs and what changes are we really willing to make to achieve that goal.  

When answering that question consider that the federal government has nearly forty-five years of experience with Medicare and in that time has not controlled costs, but rather has controlled the cost of the program largely by cutting benefits and cutting what it pays for health services.  That works ok as long as you have some place to shift the costs, i.e. the public sector.  But what does a universal system do to actually control the cost of its program?  It does many things such as: 

  1. Rely on others to fund the cost of research and innovation (as long as there is someone else)
  2. Fix prices
  3. Limit or reduce benefits on a regular basis
  4. Tightly control provision of elective procedures
  5. Accept waiting times as normal
  6. Use health clinics to provide care
  7. Accept lower physician incomes
  8. Accept what Americans would consider inconvenience in traveling for health care
  9. Ration care in some manner
  10. Create an alternative system for those who can afford it. 

Again, some people in favor of a universal government system will not find the above objectionable and that’s ok too as long as we all agree that is what we want and that is what we are willing to accept to make health care “affordable.”    

Now let’s think about quality…

Putting in place healthcare reform that genuinely slows the growth rate of costs

27 Oct

Hey, folks,  I can’t make this stuff up….hee,hee,hee, I didn’t say whose costs

Christina Romer, director of the Council of Economic Advisers:

“Putting in place healthcare reform that genuinely slows the growth rate of costs is truly one of the largest and most important fiscal reforms we can undertake,” Romer will say.

“Some have argued that it is irresponsible to reform our healthcare system at a time when the budget deficit is so large and our long-run fiscal problems are so severe,” “I firmly believe the opposite: It is fiscally irresponsible not to do healthcare reform.”

Optional confusion, confusing options or perhaps no option

27 Oct

Public option, no public option, sort of a public option, a public option the states can opt out of, a public option if this or that happens. A public option that is called something else. Are we having fun yet…just wait.

I have a public plan and I don’t even have an option to take it or not. While I can choose among some alternative designs, I can’t opt out (and still have coverage) and people in Congress and the federal bureauocracy can take away my choices at any time, determine my benefits and what I pay.

In fact, I have been paying for that option since 1965 and so have you. Because part of my pension is not from a qualified trust I even had the priviledge of writing a check for $16,000 to cover my Medicare tax for the rest of my expected life even though I am retired.

There must ber a better way to do this

There must ber a better way to do this

So now Congress wants to lower the government’s cost for my public option so it can start another public option one paid for with premiums even though my public option is paid for with payroll taxes and premiums and is going broke. And many in Congress want a STRONG public option meaning the payments are based on my public option’s payments which are set by Congress irrelevant to the cost of services. How does that work again?

Does the UAW represent workers in insurance companies? What jobs are we saving or creating this time?

I know, we need a $4,500 credit for anyone who buys an efficient health insurance plan before December 31. Ah nuts, that plan will never meet the new minimum benefits package standards.

How long will it take to reform the reforms?

How will employers react to health care reform?

26 Oct

According to a new survey from Towers Perrin, employers are not prepared to absorb additional costs that may result from health care reform.  That of course is no surprise as (contrary to political rhetoric) costs for large employer self-insured plans have been rising just as fast as insured premiums.  Hey, it’s not the insurance companies this time?

Where's the cash?

Where's the cash?

Cutting back benefits is on the employer strategy list and guess what that means, higher out of pocket costs for workers.  The idea that somehow we can have  reform that amounts to little more than a giant shell game (or perhaps Ponzi scheme) of moving costs around without addressing the underlying causes is laughable. 

Well it would be if it were not so serious and so expensive to learn this lesson.

The idea that what what is being done will make health care affordable is absurd.

The wonder of wellness

26 Oct


How to control health care costs; the ultimate question. If you look at the various bills pending in Congress and if you listen to the politicians (but not anyone who knows what he or she is talking about), you will see that paying for wellness and preventive services is claimed to be a big part of controlling health care costs.

In fact, the pending legislation requires 100% reimbursement for many such services. While obtaining such services may be a good idea for the individual, they in fact add to health care costs.

An article in the November issue of Bloomberg magazine notes there are no studies showing savings from general use of screenings and preventive services. While there may be savings on health care for one individual found to have a disease early, so many people have to be screened to find that person the cost of screening exceeds the savings.

Even employers have bought into the idea of wellness and preventive services as a cost saving tool sometimes paying employees to change behavior. It all sounds good until you look at the facts. Employers have the additional disadvantage of not even being sure the employee is still employed if there are any benefits to capture in the years ahead. And that is one of the catches, it takes years, perhaps a lifetime to reap any benefits of a healthy lifestyle.

As Princeton’s Uew Reinhardt says, early intervention is desirable. It just won’t cure the chronic problem of rising health care costs. But if you listen to the politicians on both sides of the aisle you will repeatedly hear them claim that requiring insurance companies to pay for things like mammograms will save money. 

So it is with many elements of health care (insurance) reform, unsubstantiated claims, generalizations and pie in the sky assumptions from all sides.  In addition, there is complete disregard for the fact that it is as the name implies, insurance.  We fail to question why routine screening, flu shots, even contraceptives are covered by health insurance at all.  They are predictable, manageable costs not insurable risks.  They are too expensive for many people to afford you say?  Well, they are expensive because somebody else is paying for them and we don’t care what they cost.  They are covered by many insurance plans because they were mandated by state  politicians and guess what, all those mandates are a major factor in making health “insurance” unaffordable.  And what do the people in Washington do, they do more of the same, create the impression that not only do people have the right to such coverage but that insurance companies are the very devil if they try to take it away.  In NJ one candidate running for governor who opposes these mandates is being eaten alive by his opponents campaign ads and being accused of not caring about women because he is against insurance mandated coverage.  But there is nary a word about why health insurance in NJ costs so much…scratch that, it is those insurance companies raising premiums that cause health care to be so unaffordable.

So how much does a mammogram cost, between $80 and $120 with an average of $102.  How does that stack up to say a manicure or perhaps a cut, color and blow dry?  Well, a manicure can range from $12.00 to about $40.00 and taking care of hair; for that I went to a discussion group for women and here is what one woman had to say:  “I pay $35 for my cuts, but can’t get out the door if I get a partial foil for less than $100. A normal full visit for me is about $150 including tip…this is also why you can see my roots! :-) Lucky for me, my hair grows slowly and I don’t color drastically!”

So, we need insurance to cover a mammogram once a year or less, but we find the money to pay for a new look every three months or so…go figure.  Is there a new untapped insurance market out there?


Is a bad hair day an insurable risk?

No matter, we will continue down the current path just the same.  Reforming health care has become so distorted nobody knows what is going on anyway.

Where’s Barack?

25 Oct
Is he having a burger, stopping by a school, playing golf, dancing, campaigning (26 gigs so far this year-somewhat of a record), having a beer in the Rose Garden, appearing on late night TV, accepting a Nobel prize, flying hither thither and yon?
Is he giving a speech….again?  Where’s Barack?
Can you find Barack?

Can you find Barack?

Barack, please get back to your desk and get to work

Barack, please get back to your desk and get to work
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