Archive | October, 2010

The income tax deduction for home mortgage interest and the pre-tax payroll deduction for health benefits may be eliminated

29 Oct

The Presidents deficit commission is considering an array of ways to deal with the huge and growing federal budget deficit and national debt.  Given that the big three of the federal budget are likely off the table or subject to only long-term gradual changes, Medicare, Medicaid and Social Security (and oh yes, health care reform) are unlikely to provide much budget help in the near future.

I don't want it, it cost too're doing what with my Social Security?

The Tea Party goers can yell all they want about federal spending but the truth is we all like our entitlements and once they are ingrained, they are here forever.  Both politicians and average Americans tend to forget or ignore this fact.

Early reports say the Commission is looking at a variety of tax breaks that Americans have come to enjoy and rely upon, including the deduction for mortgage interest on a home and the ability to pay for health benefit premiums for an employer plan with pre-tax dollars. However, these types of changes while having an immediate impact, are not dealing with the issue of spending. They merely raise revenue to continue the spending we have already initiated and are likely to continue. Of course, the Commission is no doubt looking at some spending items such as defense, but that has many implications from security to jobs. Sure, there is waste in many areas of government, but the reality is…

the world revolves around retirement and health care entitlements. Those expenses private, public and personal eventually control our lives.

Vive la France!

There are no easy solutions here; we have gotten ourselves in a real mess from one thing and one thing alone, too much spending, a situation that should be familiar to many Americans in their own lives. Unfortunately, there is no mortgage modification program, or debt management company that will help the government settle for a fraction of what it owes or help it declare bankruptcy (let’s hope).

Eliminating the deduction for mortgage interest will further hurt the housing market and slam the middle class upside the head because their home may no longer be affordable. Eliminating pre-tax premiums for health benefits from working people, (an admittedly illogical change in the tax laws in the first place) again will hit middle and low-income working people in the pocketbook because employers have used this leverage to continue raising employee premiums.   Hey, I’m not making any judgments here. The Commission has a tough job and Americans are going to face some tough challenges and goring of their favorite Ox to solve our financial woes.

Past Congresses got us into this mess, we enjoyed all the tax benefits and we didn’t question the new spending or new goodie bags coming our way, now it’s time to pay up…maybe.

What the #@&* is a wellness program?

The shame is that we are likely to use a band-aid approach once again, pass the buck to future generations, create unintended consequences and re-elect the same kind of people who pander to the voters.  We Americans are not unlike George Meany former head of the AFL-CIO who when asked what the unions wanted answered  “more.”

It’s time for a little zero based budgeting and starting over with a new tax code…yeah, like that’s going to happen.

Do we have a right to complain about our politicians?

27 Oct

The answer to that question is probably no. After all, we routinely dismiss serious character flaws and low moral values as insignificant or (my favorite) not relevant because they relate to ones personal life. 

  I really do have to learn to lie better


Are we so stupid to believe that such behavior and absurd rationalizations do not also apply to the politician’s behavior on the job? In Connecticut Blumenthal blatantly and repeatedly lied about serving in Vietnam, but he is ahead in the polls. Why would we assume he will not lie on the job if he is elected? Why is his overall behavior not an indication of his ethics in all that he does, especially in the world of power and politics?

  Lack of support, what lack of support?


Candidates of supposedly high (or at least acceptable) moral character routinely “approve” attack ads knowing they are at best misleading and more likely contain outright lies. Sarah Palin made hay out of her claims about “death panels” as part of health care reform and rather than obtain the facts, her “supporters” lapped it up like a cat with spilled milk.

African-Americans (not all let’s hope) can be counted on to rally behind Black politicians caught red-handed breaking the law or displaying serious lapses in ethics as they like to say. In truth, this is exactly the opposite of what any group demanding (and deserving) respect should be doing. Rather, they should be demanding the highest level of ethics and morality from those representing them (as should we all for that matter).  Two prime examples of this not happening involve Marion Barry  and  Charles Rangel who seem to be able to garner support regardless of their behavior.

Hey, nobody is perfect, we all have our skeletons in the closet I guess, but that is different from having the chutzpah to flaunt blatant unethical and illegal behavior by even running for office and expecting to win.

American voters get exactly what we deserve and should expect. We get politicians who say and act for the primary goal of getting elected because they know if they tell Americans the truth they will not be elected. Once elected they continue the same personality traits they had when running for office. With more power it is not a grand leap to rationalizing all their behavior.  What the heck, there are still millions of Americans who cannot see the connection between Bill Clinton’s behavior in the White House and his duties as President of the United States. 

Mens Health huh?

The most frightening part of all this is that the views of the American electorate are likely a reflection of the values of our society as a whole, but what do I know, I don’t even make the baby boomer generation.  Have you checked the TV line up lately? I wish it were only a vast wasteland.

A “working” American’s letter to President Obama

25 Oct

Dear Mr. President,

Let me get right to the point. Please stop demonizing me.

After working and saving for over fifty years, I have the unenviable position of being one of those Americans who you insist have not paid his fair share.  I beg to differ.  I have worked since I was fourteen and continue to do so at age sixty-seven.  Mr. President I did not roll out of bed the day I graduated from high school and find myself “wealthy.” Let me explain.

That's me as a boy on my parents luxury estate

I grew up in East Orange, NJ in a one-bedroom apartment with my parents and sister. I slept on the couch in the living room. My father was an automobile salesman who worked seven days a week, my mother stayed at home. I graduated from East Orange High School with a few hundred other people, including about 50% minorities.  Since no one in my family attended college, there was no mention of it for me.  I was told to take a general course in high school. While I was not prepared for college, I graduated high school in 1961 knowing how to write a check, balance a checkbook and I could find France on the map. I knew who the second president of the United States was and I respected my teachers, quite an accomplishment by today’s standards.  The point is I grew up a decidedly average American.

It took me six months to find a job after high school graduation and when I did, it was a union position as a mail boy in a large company. I was the lowest paid person at $1.49 an hour out of 15,000 employees.  I retired from that same company in January 2010 as a Vice President.  You see, it took me forty-eight years to become one of the people you seek to blame for America’s economic woes.

I began college at night a few years after graduating high school, but learned that I had none of the prerequisite courses and would have to attend for two years before I could start receiving credits toward graduation.  As naive as I was, I gave up.  In 1968 my National Guard Unit was called up for Vietnam (most people do not even remember that activation) and I spent twenty-two months on active duty. When I was discharged, I again started college going to two different community colleges, then a state university for a total of nine years to earn a degree.

During the forty-eight years I worked, my wife and I raised four children. She stayed at home to raise the kids (and participated in all their school activities, volunteered, etc.). We lived modestly (my children still remind me I never took them to Disneyworld), we never used credit cards or our home as an ATM and we saved.  We put all four children through college using all our savings to that point and started saving again ten years after our first child began college. Oh, and to help with the bills during the college years, we started a small in-home business in which the entire family participated.

We live in the same modest eighty-year old home (sans a family room let alone master suite) we purchased over 35 years ago. We still have a small mortgage (ten years of college, remember?), but no other debt. 

During my forty-eight year career, I was fortunate to accumulate a good pension and together with my Social Security and investment income, I meet the new definition of “wealthy” in America.  No, I am not a billionaire or even a multi-millionaire, just comfortable at age sixty-seven.

Do not misunderstand me Mr. President, I am not special.  Millions of Americans can tell a similar story and more important, millions more are working hard to achieve the same success. I do not want a pat on the back. What I do want is for you to stop holding me up as an example of what is wrong with America. I want you and members of your party to stop telling Americans that I did not and do not pay my fair share.   

I never hampered anyone from taking advantage of his or her opportunities, I merely took full advantage of mine and isn’t that part of the American dream. Instead of pulling down those Americans who played by the rules and were successful, why not tell struggling Americans that a good education is vital. Tell them that a sound family life is necessary and that it is not cool to drop out of high school, graduate unable to read or write, buy things you cannot afford or accumulate debt unnecessarily

Oh, one more thing.  I paid Social Security taxes from age fourteen for a total of over fifty-three years most of that time at the highest level.  I realize those taxes were not to my benefit but to beneficiaries collecting Social Security while I was working.  However, today as I collect my benefits I return 21% of it to the government in income taxes.  I guess that’s fair.

Mr. President, you are not bringing America together, you are pulling it apart.


  A  “Working” American

P.S.  Mr. President, I would like to leave the assets I have left when I die to my children and grandchildren. I want to help them achieve their American dream. None of them is fortunate to have a pension, the future of their Social Security is questionable and surely, they will be paying much more in taxes to deal with the debt we are accumulating as a nation.  The estate tax was intended to be temporary; today it is gone, so let us leave it that way.  I paid my fair share; there is no reason for the government to confiscate what is left of my American dream.

It is hard to find words for the President’s call to give $250 to Americans collecting Social Security

23 Oct

Sure, it would be nice to do, why not give $250 to our seasoned citizens or for that matter to young families trying to make ends meet. A mere $250 turns into $14,000,000,000, that is fourteen billion, but who is counting and after all what is a mere $14 billion compared to a one trillion-dollar deficit?

“Many seniors are struggling in the face of the economic downturn, having seen their savings fall,” said White House press secretary Robert Gibbs. “We urge members of Congress on both sides of the aisle to support our seniors, veterans and others with disabilities who depend on these benefits.”  

Seniors, veterans, the disabled, “working” Americans, minorities and the middle class should be insulted by the low esteem in which our politicians hold them.  By the way, what is the difference between a senior and a veteran on Social Security?

I think it's time I ran for office

The fact that inflation is so low that it does not trigger an adjustment in Social Security benefits does not matter to politicians (who dare we mention, made that law in the first place). Because there is no adjustment in the Social Security benefit for most beneficiaries, there is also no increase in the Medicare Part B premium – a young family should be so lucky to see their health insurance premium frozen.

Those of us who are over 65 are already consuming a disproportionate percentage of America’s resources we do not deserve more.

Here is how Speaker Pelosi puts it.  Note that there is a “bedrock promise of economic security”  I wonder who else has such a bedrock promise?  I thought the promise of America was life, liberty and the pursuit of happiness.

The Seniors Protection Act, introduced by subcommittee Chairman Earl Pomeroy, provides America’s seniors and all Social Security recipients with a one-time payment that will help millions make ends meet during these difficult economic times.

In the event that the Social Security Administration announces it will not provide a Cost-of-Living Adjustment (COLA) for recipients this year, the House will vote to provide seniors with a one-time payment of $250. I have asked the Ways and Means Committee to bring this legislation to the floor during the lame duck session. All Members of Congress should join us in supporting this legislation which will be fiscally responsible and upholds our bedrock promise of economic security for our nation’s seniors.

There mere fact that Obama should support this additional spending (along with Pelosi and Reid) tells us something about his integrity and ethics.  This is blatant politics aimed at winning more votes on November 2.  It should also tell us something about the dangers of entitlements as Americans become more and more dependent on what the government doles out and politicians become more responsive to ever-growing demands.  At a time when Social Security is running a deficit of its own, when health care reform is adding to entitlements, when the U.S. is struggling to compete with the rest of the world and the economic future of our children is teetering, what responsible person would propose spending more of what we do not have to spend?  Apparently, a politician would.

Let’s hope Bank of American holds the mortgage on the U.S. Treasury, at least we know they will not be able to figure out how to foreclose.

Lest you think only future promises are used to lure the voters with goodies, consider this use of an existing “benefit”:

“A monthly deduction for commuter cost.”

So touts a political ad for New York’s Sen. Chuck Schumer’s relection.  At a time of fiscal uncertainty and unprecedented federal debt you would think such a claim would be the last thing a politician would want to be associated with. Apparently, that is not the case because this is a benefit for “middle class” Americans.

Medicare premiums for 2011, no increase for most, but costs are not on hold

21 Oct
Created by vectorizing Image:Medicare and Medi...

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Most Medicare beneficiaries will not see an increase in their Part B premium for 2011. It’s not that Medicare costs are being controlled. In fact, new benefits effective in 2011 are adding to the cost of Medicare beyond the normal growth in costs.

The fact is that the law does not allow an increase in premiums for most existing beneficiaries in years when there is no increase in the Social Security monthly benefit because of low inflation and the COLA provision in Social Security is not being triggered.

While this may seem like good news, in the long run it is not. What it means is that at some point there will be a lot of catching up to do.  If costs continue to go up and the portion of those costs paid by beneficiaries does not, who pays them?  Either they are absorbed by the Federal government or eventually they are built into future premium increases for Medicare beneficiaries. In fact, when there is a COLA, perhaps in 2012 the real premiums (reflecting three years of increases) will be spread across all Medicare beneficiaries. In the meantime, the higher costs are absorbed by the 25% on Medicare who do not receive this exemption.

There are two groups of Medicare beneficiaries who are not exempt from the COLA protection.  The first group is very low-income people on Medicaid.  In that case, the real premium increase in Part B is picked up by the state providing the Medicaid…otherwise known as cost shifting to taxpayers in the states. The second group is the folks we have all come to despise along with insurance companies, the folks who make the big bucks.  In this case it is Medicare beneficiaries with incomes over $85,000 and couples with an income over $170,000.  These folks get to pay an additional premium for Medicare Part B and are not exempt from the COLA limitation.  These beneficiaries who are required to make supplemental payments to the standard Part B premium are likely to see a significant increase for 2011, perhaps 20% or more.

Individuals who first start to receive Social Security in 2011 are also not exempt from the premium increase and will pay the actual premium reflecting Medicare costs for Part B.

More divisiveness from (take your pick).

20 Oct

I am not sure it is worth commenting on this type of politics, but it appears to be the norm these days to pit one group against another, one business against groups of Americans or to simply throw around inflammatory accusations or take a more direct route and simply lie. I have been trying to figure what happened in the last two years and I think I have it. It’s the way generation x was raised by the boomers.

Rein in the excesses of the health insurance industry to protect Hispanic Americans,”

 and I thought insurance companies were screwing all Americans on a non-discriminatory basis. Hispanic Americans should be insulted by this blatant pandering for their vote.  I am beginning to wonder how intelligent the American voter really is.  African-Americans support African-American politicians even if they are crooks or violate ethics codes, white Americans support politicians who stand up and lie to their face about military service and forget entirely about moral values, they seem to be of no consequence whatsoever.

And we are worried about a financial meltdown in the U.S., we should be so lucky to have that as our biggest problem.


October 14, 2010 | View online
What Health Reform Repeal Means for Hispanics
By Lesley Russell
The enactment of the Affordable Care Act provides a unique opportunity to address the health care disparities that communities of color experience in the United States. The House Republicans’ “Pledge to America” plans to repeal health care reform and replace it with a grab bag of isolated measures that mostly benefit those who already have health care coverage.

The Republican “Pledge to America” will not:

Improve access to health insurance coverage for Hispanic Americans

Rein in the excesses of the health insurance industry to protect Hispanic Americans

Improve access to a primary care provider and usual source of care for Hispanic Americans

Provide better preventive health services for Hispanic Americans

Improve the lower health quality and health care disparities communities of color experience

Read and download the full memo here.

NEW! CAP en Español
View policy reports and more from our partner organization, the Center for American Progress’ new Spanish-language website.
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Center for American Progress Action Fund | 1333 H Street NW, 10th Floor | Washington, DC

Don’t you just love it, rationalizing our way to debt. Governor Christie and the fallacy of logical thinking

19 Oct

Recently Gov Christie in NJ put the cabash on a train tunnel running from Jersey to New York. It cost too much and was expected to have a budget overrun of $5 billion. Taxpayers simply can not afford that, he said.

Wait, say his critics that project would create 6,000 jobs and take cars off the road. Besides, the cost overrun is exaggerated, the cost overrun is ONLY $1 billion and that’s years in the future (why worry about that now- so is your retirement years in the future, but hey, why worry about that now either?).  New Jersey hasn’t worried about $150 billion in unfunded pension and retiree medical liability, why start worrying about long-term costs now?

See, you really can afford anything if you come up with enough reasons to spend that money, except of course a flu shot, for that you need health insurance to pay it all.

The political mind is a thing to behold.

Why can’t New Jersey taxpayers afford the tunnel? Let me provide a close to home example.

I am reading the luxury home section of the Wall Street Journal for October 15.  There is a featured home 20 mile northwest of Chicago.  It is selling for $1.6 million, is 7,100 square feet with 100 feet of lake frontage and a private beach. The house was built in 2008 and has 20 rooms including five baths, a movie theater, sauna, wine cellar and boat dock. The property taxes are $12,520.

By pure coincidence I pay the same taxes on my home in NJ, but that is the extent of the similarity.  My house was built in 1929, is 1900 square feet without a master suite, family room, large kitchen or finished basement and not a walk in closet in sight. And, my house sits on a 50 x 120 foot lot. 

New Jersey’s state and local taxes are the highest in the nation and it’s income tax is near the top as well.  So, should NJ taxpayers take on the added risk of billions of dollars in cost overruns because …well for any reason? provides a reality check for high health insurance premiums and what we can expect under PPACA

16 Oct
President Barack Obama, Vice President Joe Bid...

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What does eliminating all health insurance underwriting really mean?  In New Jersey insurers must offer a series of standard plans and cannot apply any underwriting, everyone must be accepted regardless of health status. This is not different from requirements under PPACA.

To get an idea of costs I went to   and entered info for a family living in New Jersey. The father and mother were born in 1970 and there are two children one born in 2002 and the other 2005, all non-smokers. The first plan that came up was NJ Individual Choice Plan D provided through Aetna. This plan has a $1,000 individual deductible and $3,000 annual out-of-pocket limit and includes prescription drug coverage.  You can go to any doctor you choose. In other words, it contains many of the attributes that people want to see from health care reform, relatively low out-of-pocket costs, and nobody coming between you and your doctor.

The premium for this coverage is $9,132 per month (yes, $109,584 per year). 

Just to be sure there was no screw-up on, I called Aetna directly and confirmed the price.  That is ludicrous I said, who would buy that?  The representative on the phone agreed it was absurd but noted that they are not allowed to do any underwriting for these policies. 

I then looked at another plan offered by the NJ Blue Cross/Blue Shield plan.  This plan was Point of Service, which means you must use network doctors to get full benefits.  There is no deductible if you stay in network; the out-of-pocket limit is $5,000 per year per person. Office visits and some hospital services required a co-payment of $30 to $50 and $300 per day for the first ten days in a hospital.

The premium for this coverage is $2,128 per month.  With restrictions and greater cost sharing comes lower premiums albeit $25,536 a year.

When it gets too hot, I'll get in all the way.

The question is, will the PPACA rules requiring elimination of underwriting and mandating new benefits affect the price of health insurance across the country.  Remember, when politicians talk about “affordable” health care they are talking about the premiums people pay (after being subsidized), not the true cost of the coverage.

These prices are due largely to the elimination of underwriting in New Jersey  several years ago which brings with it adverse selection (and NJ is a high cost state to begin with) .  The potential for adverse selection is one reason insurers pushed for mandated coverage under health reform.  The only way to assure a more diverse pool of insured people is to make sure that everyone is in the pool.  It remains highly questionable if the penalties in PPACA for not carrying health insurance are sufficient to avoid the problems experience by Massachusetts where people obtain coverage when it is needed and thus further drive up costs for all those who are insured. 

Despite the political rhetoric, there is no free lunch. Health care premiums reflect the cost of health care provided.

The penalties for not carrying health insurance are the greater of the flat fee or the percentage of income.

 Year        Flat  Fee       Percentage of Income


2014      $95                          1.0%

2015      $325                         2.0%

2016      $695*                     2.5%

*The penalty will be increased annually by the cost-of-living adjustment

Balking at the cost of prescriptions, err, that’s the co-pay

14 Oct

The Wall Street Journal, October 12, 2010 contains an interesting article on the growing number of people who leave their prescriptions at the pharmacy when they hear the cost of the drug to them, the cost being the co-pay or the coinsurance. 

According to the article, the abandonment rate, that is leaving the prescription at the pharmacy, was up 55% in the second quarter of this year. The average co-pay for a brand name drug rose to $28.00 since 2000 according to the report.  That is $28.00 mind you, not $2800 dollars.

Patients are notorious for not taking their prescriptions as ordered, skipping dosages, not completing the prescription or simply not taking the drug at all. Abandonment is a new twist that goes along with the psyche that says parents cannot afford flu shots for the kids because they are not covered by the health plan, but have plenty of money to spend on a cell phone. Of course, that worry is going away as PPACA requires somebody else to pay 100% of the cost of a flu shot.

Take me, please

Clearly in some cases health care is unaffordable, but in far more situations, it is a matter of priorities in spending ones money, especially for more routine expenses.  That is the essence of the health care problem; we see no value in spending our own money on health care.

The relatively new form of health insurance, the high deductible health plan (HDHP) is a good example of our priorities.  In return for a high deductible, starting at about $2,400 for a family, there are much lower premiums. Plan participants assume part of the risk, betting that healthcare spending up to the deductible amount will not offset the savings in premiums.  However, when the risk is realized people scream, “You expect me to pay $325 for that prescription?”  Well, yes, just as the insurance company pays a claim in return for your premium payment.  In the case of prescription drugs, the HDHP can be a real shock because the co-payment approach is not permitted and the patient pays the full cost up to the deductible, which cannot be applied on an individual basis, but collectively as a family unlike traditional insurance coverage where there are individual and family deductibles.

Patients Take More Power over Prescriptions 

There is a clear trend among employers to raise co-payments for prescription drugs and to place strong financial incentives on the most efficient use of drugs.  These incentives include higher cost sharing for brand (as opposed to generic), for non-formulary brand drugs and lower costs for using a mail order pharmacy.  In other words, employers are steering patients to be efficient consumers of health care, at least when it comes to prescriptions.  The problem we face is the critical point where cost sharing inhibits health care and there are diminishing returns as a result. 

How much cost sharing is too much? 

The problem in answering that question is that it is not a dollar and cents issue, it is emotional and perceptual. What the average person can afford and what they think they should pay are two different things. Employers who hike cost sharing would do well to spend time and money on education and communication (for employees and their families) so that their efforts do not prove counterproductive.

Reporting the value of health benefits on the W-2 NOT REQUIRED FOR 2011 (IRS Notice 2010-69)

12 Oct
IRS Form W-2

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 The IRS has issued a reprieve from the required reporting of the value of employer provided health benefits on the workers 2011 W-2.  This is a good thing.  It’s nice to know that regulators understand the realities of compliance even if Member of Congress don’t understand what they vote on.  Here is an excerpt from the Notice and a link to the full text.

Notice 2010-69 

This notice provides interim relief to employers with respect to reporting the cost of coverage under an employer-sponsored group health plan on Form W-2, Wage and Tax Statement, pursuant to § 6051(a)(14) of the Code. Specifically, this notice provides that reporting the cost of such coverage will not be mandatory for Forms W-2 issued for 2011. The Treasury Department and the IRS have determined that this relief is appropriate to provide employers with additional time to make any necessary changes to their payroll systems or procedures in preparation for compliance with the reporting requirement.

The White House group on “Linked In” What is in the Health Care Bill – I say let’s focus on what isn’t in PPACA.

12 Oct
Health insurance premiums paid on behalf of wo...

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The White House has started several discussion groups on , one of which is What is in the Health Care Bill? Needless to say, the majority of people posting are in favor of the legislation and display limited tolerance for opposing views because they focus on the “goodies” contained in the legislation. I took some time to post a different perspective (what, you are surprised?).

Let us step back and think about this beyond the sole context of PPACA.

What is the real problem we are trying to address? It is health care costs, because the cost of health care is the main driver that creates the uninsured and causes various underwriting standards for insurance companies that everyone hates (the same underwriting that is applied to your auto insurance, your homeowners insurance and even your life insurance, not to mention Medicare where you pay a penalty for late enrollment as well). There are many drivers of cost that in turn is the driver of premiums (insurance companies as an industry operate on a 5% profit margin far lower than even your local regulated utility). Making health care affordable requires dealing with the underlying cost of health care and the reasons for it. PPACA does not do that, quite the opposite in fact. Subsidizing premiums for families earning up to $88,000 or giving tax credits to small employers is not making health care affordable, it is shifting costs and masking the real problem.

What is the real problem? In large part, it is the fact that we cannot accept the concept of insurance when it comes to health care; rather we are convinced that every service prescribed be covered and largely paid for by someone else. Why for example is health “INSURANCE” required to cover oral contraceptives, or the voluntary reversal of a vasectomy or a flu shot or even a routine physical? Does your auto insurance cover an oil change or your homeowners a new roof when you decide it is necessary? Would you pay those premiums if they did? These examples are not insurable risks nor are they catastrophic in nature cost wise. 

And, yes it is exactly the same thing when you compare an oil change to a birth control prescription, they both cost about $30.00 or less, it’s money, your money (perhaps more accurately it is someone elses money).

Politicians have also touted the fact that “nobody should come between you and your doctor.” Well, to receive the optimum level of care that is exactly what IS necessary in many cases. Our system is disjointed and uncoordinated and you have no way of knowing if you are receiving the best or most appropriate care from your doctor who in reality is a small businessman. Did you ever hear of anyone who was going to a doctor who was not “the best?”

In 1961 when I started administering health benefit plans, there was no coverage for anything other than hospitalization and physician services in the hospital, plus a small fixed dollar amount for tests and x-rays. There was no coverage for office visits or other outpatient care or Rx. Back then, an office visit cost $5.00. In 1963, we started to “improve” the coverage and added a major medical plan with a $100 deductible and 20% coinsurance for outpatient services and Rx. We also abandoned fixed fee schedules for physician services and instead paid the “Reasonable and Customary” fee that increased each year as doctors raised their fees. Guess what? From that point forward, nobody cared what their health care cost and costs began their upward spiral that continues today.

Yes, there are other factors like new technology our general health status, etc. but the fundamental problem is that we have little personal responsibility for our health care expenses as we do with every other expense in life. We have convinced ourselves that somehow $100 spent on health care is different from $100 spent on taking the family out to dinner. PPACA makes this situation worse by mandating more and unlimited coverage, and by further subsidizing the premiums, many Americans pay. In addition, by demonizing insurers, politicians have redirected our attention away from the real issues to a convenient scapegoat. Keep in mind that about 70 million Americans are covered by employer self-insurance plans all of which are facing the same cost issues without the involvement of any insurance company.

Heath insurance premiums and the underwriting by insurers are not the problem, they are the symptom. PPACA may help this person or that group today, but it does nothing to address the real problems we face and exacerbates the problem in the years ahead while creating a new entitlement mentality that the next generation will be forced to deal with.

Like it or not, that is the way it is.

Don’t you just love it, rationalizing our way to debt.

11 Oct

Recently Gov Christie in NJ put the cabash on a tunnel running from Jersey to New York. It cost too much and was expected to have a budget overrun of $5 billion. Taxpayers simply can not afford that he said.

Wait, say his critics that project would create 6,000 jobs and take cars off the road. Besides, the cost overrun is exaggerated, the number is ONLY $1 billion and that’s years in the future (why worry about that now- so is your retirement, but hey, why worry about that now either?).

See, you really can afford anything if you come up with enough reasons to spend that money, except of course a flu shot, for that you need health insurance to pay it all.

The political mind is a thing to behold.

11 Oct

Tap here to begin writing.

Employers express concern over the new external appeal process under PPACA

11 Oct

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Millions of Americans receive their employer-based health care benefits through self-insured employer plans.  These plans are now subject to new rules under PPACA, one of the most troubling is the requirement to have an external claims appeal procedure using designated independent review organizations.  The American Benefits Council represents many of these companies and has written to the Department of Labor expressing the employer concerns about this aspect of PPACA.  The concern employers have are related to the administrative complexity, new administrative expenses and the short time frames involved in this process.  The broad brush used by PPACA (typical of federal legislation) imposes burdensome requirements where they are least needed.  No group is more diligent in assuring the fair payment of health care claims than large employers who are self-funding their employee’s benefits.

New external claim review procedures


How to make a law keep the promises made on its behalf-the necessary watering down of PPACA, HHS grants excemptions from the law

10 Oct
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Keep the coverage you like, no problem.

Make sure employers don’t drop health insurance coverage because of the burden created by PPACA thereby making the President look bad, no problem.

All you have to do is exempt their plans from an offending section of the law, no problem.         Turning up the heat

Thirty employers covering about a million people have received exemption from the provision of PPACA raising benefit limits. There is, of course, logic in this decision.

The real concern is that we have a massive patchwork law with many unintended consequences that require exemptions, waivers, delays in implementation and regulatory changes. That should tell you something about where this law is leading us.

In some cases PPACA is directly leading to employers cutting benefits or seeking was to eliminate them, but in a broader sense the law is changing the environment for employer-based coverage both for active employees and for retirees who are fortunate to have employer coverage.  That is because employers are abler to use the law and its uncertainties as an excuse to make changes they wanted to make all along. 

In other words, on some real level PPACA is providing cover to those employers who made promises that have become inconvenient so they simply abandon them.  Recently, Honeywell sent its retirees a letter announcing new health plan options available in 2011.  Retirees were invited to meetings, but when the meeting started, no Honeywell representatives were present, rather a third-party was there to explain all the new options and the assistance this group would provide helping retirees make a selection from the new options.  Honeywell is dropping it s retiree coverage and eliminating any financial support it was providing.  In other words, the retirees are on their own to select and pay for their health benefit coverage.

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