Archive | January, 2011

Obama administration claims “lower costs” for individuals and small business under PPACA. Tax credits, subsidies and artificially holding down premiums is not making things better

30 Jan
Kathleen Sebelius

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The Administration is pushing hard on the myth of lower health care costs because of PPACA. The problem is that HHS does not know the difference between artificially holding down premiums, and controlling health care costs.

Read this press release. Look closely at the supposed savings and then ask yourself what is being done to control health care costs. What are the long-term consequences and costs of this strategy? There are no savings here but rather costs are moved from one place to another, essentially from some Americans to the federal government and other Americans.

Reduced cost sharing, lower out-of-pocket costs; how does that lower health care costs?  The writers of this bologna should delete “quality” and “affordable,” from their writing until they understand the terms and how PPACA actually accomplishes either (or not). 

These types of proclamations are not only self-serving, they are misleading and not at all helpful.  They serve to promote the individual value of an entitlement in the quest for political support while diverting attention from real issues and unsolved problems.

To lower health care costs, we must lower the price of health care services, use fewer services, and avoid duplicate and other unnecessary care. It means becoming more efficient. It means changing the system not manipulating insurance premiums.

New HHS report shows some families can save up to $14,900 annually, tax credits will save small businesses $6 billion over two years

Secretary of Health and Human Services Kathleen Sebelius today released a new report showing how much families and businesses can save on health insurance premiums and out-of-pocket costs under the Affordable Care Act in 2014 – each year, a low-income family of four could save up to $14,900 and businesses will benefit from the savings and tax credits in the new law.

“For too long, skyrocketing health care costs have made it hard for businesses to provide coverage for employees and have made it difficult for families to afford coverage,” said Sebelius. “The Affordable Care Act is providing families and businesses with more freedom, choices, and savings in their health care coverage.

Without the Affordable Care Act, consumers and businesses would face higher premiums, fewer insurance choices, and rapidly rising health care costs.”

The report finds that, compared to what they would have paid without the law:

  • Middle-class families purchasing private insurance in the new State-based Health Insurance Exchanges could save as much as $2,300 per year in 2014.
  • Tax credits provided by the Affordable Care Act will lead to even greater savings. For example, in 2014, a family of four with an income of $33,525 could save as much as $14,900 per year since they will also qualify for tax credits and reduced cost sharing.
  • In 2014, small businesses, on average, could save up to $350 per family policy and many may be eligible for tax credits of up to 50 percent of their premiums.
  • The tax credits are already available to small businesses, and cover 35 percent of their premiums. For example, a firm with 10 workers who earn an average of $20,000 annually could currently receive credits of $35,000 annually.
  • These tax credits could save small businesses $6 billion in 2010 and 2011.
    All businesses will likely see lower premiums of $2,000 per family by 2019, which could generate millions of dollars in savings.

These savings are in sharp contrast to the rising insurance costs families and businesses have experienced over the previous decade. From 1999 to 2009 premiums more than doubled, rising by over $7,500 for the average family that gets insurance through an employer.

The high cost of health care made it difficult for many small businesses to offer insurance to their workers. The percentage of small employers offering health insurance dropped from 65 to 59 percent between 1999 and 2009.

The report outlines several of the provisions of the Affordable Care Act that HHS has already begun to implement that will help create these savings, including provisions to increase transparency in the health insurance marketplace. In 2011, most health insurance companies will be required to spend at least 80 percent of premium dollars on health care and quality improvements, rather than overhead and administrative costs. States have received new resources to improve review of proposed health insurance premium rate increases, and HHS has proposed that, in 2011, any proposed rate increase above 10 percent should be reviewed.

In addition, businesses are receiving new resources to help meet rising health care costs for employees and retirees. Many small businesses are already eligible for tax credits that cover up to 35 percent of insurance costs for their employees. And more than 5,000 sponsors have been accepted into the Early Retiree Reinsurance Program, which is designed to provide financial relief to help early retirees and their families continue to have quality, affordable health coverage.

The report also emphasizes the important changes coming in the future. Starting in 2014, State-based Exchanges will make it easier for people to compare benefits and services and enable individuals and small businesses to pool together and use their market strength to buy coverage at a lower cost.

Not many Americans hold out hope of real spending cuts

29 Jan

Do you believe politicians will cut spending?

A new Rasmussen Reports national telephone survey finds that only 38% of Likely U.S. Voters believe Congress is even somewhat likely to significantly reduce government spending over the next year while 54% say such reductions are unlikely.

Those figures include only nine percent (9%) who say significant cuts are Very Likely and 15% who say they are Not At All Likely.

US deficit and spending out of control. Why spending our childrens future really matters.

26 Jan
Historical government spending in the United S...

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Grand words and dire predictions without substance or the courage to tell the truth are meaningless.  Let us put this in perspective, President Obama still sounds good, but… 

A five-year freeze on discretionary government spending is worth about $500 billion in savings over ten years.  That is less than 15% of federal spending.  The deficit is about $1.5 trillion or to put it another way, $1,500,000,000,000.00.  

The chances are if politicians do not dole out discretionary spending, you will not vote to re-elect them. Why do you think there is so much spending?

Here is the truth. The American standard of living must go down to save the United States from a financial disaster like many European countries.  No, it is not going to happen this year or maybe even in five years, but unless we change our ways it will happen.  Why will the standard of living decrease, because your discretionary spending will have to decrease and why will that happen, because you are going to pay a lot more in taxes, directly and indirectly.    

We are in a real bind.  We have massive entitlements growing out of control (Medicare, Medicaid, Social Security and now the Patient Protection Affordable Care Act). 

To continue to afford them we have two choices, cut the programs or raise taxes on everyone (not just the rich, because that will not do it).  It has been estimate that to balance the budget income taxes would have to be raised by a multiple of 2.4.  That is, if you pay 15% now you will pay 36%. Raising taxes will come in several ways, either cut tax deductions like mortgage interest, change the tax status of certain items like employer-provided health benefits or simply raise the tax rates.  In either case, you will have less to spend. 

Some “experts” feel the current situation is no big deal.  When the economy revs up again we will grow our way out of this mess because federal revenue will increase.  Think of it this way.  Say you have $8,000 on your credit card and you barely make the minimum payment because you are counting on future raises to allow you to make larger payments and eliminate the debt.  Really, and between now and when you get those raises your other bills will not increase, inflation won’t have an impact, you won’t find something else to spend the money on (think Congress looking for your vote)?

The current national debt (money we owe mostly to foreign governments) as of December 2010 is $14,025,215,218,708.52, that is trillion.  The interest on that debt to date for fiscal year 2011 is $148,238,982,913.81.  You could do a lot with $148 billion other than to pay interest to China and others.

In addition, can we count on projections for the future as bad as they are?  Can we accept that repealing PPACA (a bad idea for other reasons) will increase the deficit? According to the Social Security actuary, PPACA will not reduce health care costs. 

Deficits and debt

Consider these projections and the reality what we have done.

The Congressional Budget Office dramatically upped its projection of the fiscal 2011 federal deficit today, estimating that the difference between government expenditures and revenues would reach $1.480 trillion by the end of the current fiscal year in September. The last CBO projection, in August, was for a $1.066 trillion deficit in fiscal 2011. The deficit for fiscal 2010, which ended Oct. 1, was $1.294 trillion. The fiscal 2009 deficit remains, for now, the biggest in American history at $1.416 trillion. 

As the debate heats up and you hear that we need to help the poor, the children, the senior citizens and we need to “invest” in this and that, ask yourself where the money will come from. The Center for American Progress will e-mail us explaining whom the cuts will hurt.  Guess what, they will hurt.  That is the trouble with making promises you cannot keep, it hurts when you renege.  When public employees cry foul over benefit cuts, think about your property taxes and state income taxes.  When the AARP blasts changes to Social Security and Medicare and unions want more taken from the wealthy, ask whether seniors are taking disproportionately from limited national resources and if the “wealthy” (defined as earning over $200,000 a year) can pay it all.  As Margaret Thatcher used to say, “sooner or later you run out of other people’s money.”

There is no question that someone can make a good case for spending more and more and rationalize the validity of any new program.  There is no question we need to do many things in this Country that are important.  However, what really matters is living within our means (including some reasonable debt) and that matters most to your children and grandchildren because those generations will feel the impact of today’s irresponsibility.

My insurance company denied my claim for routine care; outrageous

26 Jan

Yesterday I took my car to the garage for new tires, alignment, oil change and replacement of two light bulbs. The bill was $725.00. I should have expected the expense, but like most people I didn’t put money away in advance so the expense took a bite out of this months pension check.

Too bad I didn’t have an ASA (automobile savings account) because when I called my auto insurance company to file a claim they said it wasn’t covered. I think that’s what they said, I had a really hard time understanding the customer service representative.  Actually I think Rashid was laughing at me.

Can you imagine if I had to pay for this expense out-of-pocket? I think those darn insurance companies are just looking to make a profit, I think they are abusing me. Why should I have to pay for the maintenance on my car?

Boy, if needed $725 worth of routine maintenance on my body I wouldn’t have to pay for it. Everyone knows I couldn’t afford that expense. Ummmmmmm

Employers and workers think health reform will increase costs. Less than ten percent of people say they are knowledgeable about health reform.

25 Jan

Health care reform will save us all money

Health care reform is government's plan to kill grandma

What do Americans know about health care reform? Not much according to a new survey. Politicians rant and rave. The left, the right, the Tea-party all stake out their positions. Conservative radio blasts rhetoric about the government takeover of health care…the truth is most people know little about health care and the reform legislation.

In other words most people argue about something they know little about, unless of course they are a regular reader of Quinnscommentary.

If you believe that health care reform will actually save money, I have a bridge to sell.

While politicians debate whether PPACA saves the federal government money you might be more interested in what it means to you, especially if you are among the hundreds of millions of Americans with employer based coverage.

Here is some new research of interest.

Employers & Workers Expecting Cost Increases From Health Reform

WASHINGTON, DC—New findings by the Employee Benefit Research Institute (EBRI) show that both employers and workers say they are not very knowledgeable about health reform, but that employers say they are likely to pass along any health benefit cost increases to workers—and, mostly, workers are expecting such cost increases.

Specifically, more than 40 percent of employers say they are likely to pass along cost increases to workers, and about half of workers expect their health benefit costs to go up whether directly or indirectly related to the Patient Protection and Affordable Care Act of 2010 (PPACA), the EBRI report finds. But a majority of both employers and workers indicate they are not very knowledgeable about the new law.

“This new legislation brings a degree of uncertainty to both employers and workers about their health plans,” said Paul Fronstin, director of EBRI’s Health Research and Education Program and author of the report. “For employers, it is how their plans will be administered; for workers, it is how much of the costs will be passed on to them.”

The findings come from the 2010 EBRI/MGA Consumer Engagement in Health Care Survey (CEHCS), with additional data from the 2010 SHRM Organizations’ Response to Health Care Reform poll (by the Society for Human Resource Management), and are published in the January EBRI Notes, online at

Among the key findings from the CEHCS:

• Low knowledge of health reform: Both individuals and employers admit that they are not very knowledgeable about health reform. Two percent of adults with private insurance report that they are extremely knowledgeable about the legislation, and only 7 percent report that they are very knowledgeable. Most report that they are somewhat knowledgeable (35 percent) or not very knowledgeable (37 percent). Nearly 1 in 5 (18 percent) report that they are not at all knowledgeable about the health reform law. When employers were asked if they were comfortable with what they knew about the law, 45 percent agreed that they were comfortable, 41 percent disagreed, and 11 percent strongly disagreed.

• Impact on health care costs: About one-half of individuals expect their health care costs to increase as a result of the health reform law, the CEHCS found. Similarly, many employers expect to pass along any increases in costs, whether directly or indirectly related to health reform: Slightly more than 40 percent of employers report that they are likely to pass along cost increases, and another 23 percent are highly likely to pass the cost increases along to workers. Few are unlikely (10 percent) or highly unlikely (2 percent) to pass along cost increases. Almost one-quarter (23 percent) were unsure at the time of the survey whether cost increases would be passed along to workers.

• Cost decreases: The CEHCS also found that employers are more likely to pass along cost increases than cost decreases. While 41 percent were likely to pass along cost increases, only 30 percent were likely to pass along any cost decreases that were directly or indirectly related to health reform. And while 23 percent were highly likely to pass along cost increases, only 10 per-cent were highly likely to pass along cost decreases.

• Continuation of health benefits: The report also found that 31 percent workers with private insurance expect their health care coverage to decline and 34 percent expect their benefits to be unchanged. And as for the future of employment-based health coverage, 32 percent of workers think their employer is likely to continue offering health benefits after 2014, and another 23 per-cent think their employer is very likely to continue offering employment-based health plans.

However, very few employers have decided to drop health care coverage: Less than 1 percent have conducted an analysis and decided to drop coverage, and less than 1 percent have decided to drop coverage without conducting an analysis, according to the report.

EBRI is a private, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does not lobby and does not take policy positions.

Retirement income, your IRA and 401(k), tax laws, discrimination and the Progressive view of fairness

24 Jan

My recent e-mail from the Center for American Progress (CAP) talks about the benefits of tax-free retirement savings and the cost in terms of lost revenue for the federal government. I find that concept intriguing. It is as if the government is entitled to everything, but it loses part of “everything” when it does not take it from the citizens. That seems a bit backward to me.

You can read their position on tax breaks for retirement savings here.

In essence their point is that the tax laws intended to encourage saving for retirement are not sufficiently progressive. This means that the people who pay most of the taxes and will likely be in the higher tax brackets in retirement will gain the greater tax advantage from the current laws and lower-income people who cannot save as much and who pay little, if any, income tax get much lower benefit from the tax laws. What a concept!

High-income individuals also have more disposable income to save. The greater a person’s income, the more likely he is to contribute to a 401(k) or IRA.  Though there are limits on the amount of tax-deductible and overall contributions individuals can make to tax-favored savings vehicles, those limits are high. The combined annual limit on employee and employer contributions to a 401(k) plan is $49,000 in 2011.

The tax system steers retirement subsidies toward high-income individuals in another way. Workers in higher tax brackets receive more savings than workers in low tax brackets because the tax incentives are structured as deductions. Last week’s installment of this series illustrated that a similar “upside-down” effect occurs with the tax break for employer-sponsored health insurance.

How can there not be an unequal distribution of tax breaks when there is an unequal distribution of taxes paid? Given that nearly 50% of Americans pay no income tax, why would they want to use any form of tax advantaged retirement savings?   However, CAP does not stop with taking the tax advantage from the “wealthy,” instead it wants to give an extra measure to lower-income.

“The retirement tax incentives can be restructured so that they encourage savings in a more progressive way, with more broadly shared benefits. One way to do that is to provide tax credits for retirement savings instead of deductions. Tax credits provide dollar-for-dollar reductions in the amount of taxes a person owes regardless of the tax bracket they fall in. So a middle-income person who owes $5,000 in income tax a year and a wealthy person who owes $50,000 would both benefit equally from a $1,000 tax credit.  The middle-income person would see his tax bill go down to $4,000, and the wealthy person’s down to $49,000.  [Ah, benefit equally you say? My fifth grade math tells me that one person is seeing a 20% reduction in taxes and the other a 2% reduction].

There is a so-called “saver’s” tax credit, but it is modest and could be designed better to reach more people.  National Economic Council Chairman and former CAP Senior Fellow Gene Sperling has proposed a progressive framework for retirement security. One of his ideas is to create a universal 401(k) plan, available to all workers, and replace the current tax deductibility component with a flat tax credit of 30 percent for all worker savings. That plan would distribute the retirement-savings incentives more fairly and target the people most likely to reach retirement without enough money to live on.  [What am I missing here? Won’t the wealthy still be able to save more and thus benefit more from the tax credit?]

Recently, the Bipartisan Policy Center proposed a similar reform: a 12 percent “refundable” tax credit for retirement savings available also to those who do not owe federal income taxes at the end of the year.” [There you go, a new welfare program for retirement, 12 percent of your income.]

The article also notes that contributions to an IRA or 401(k) plan are not subject to income tax. Clearly what they really mean and later note is that the contributions are tax deferred. What they do not make clear is that early withdrawals are subject to a 10% tax penalty and withdrawals, including earnings on contributions, are taxed as ordinary income and not taxed as capital gains, as are non-deferred investments. The capital gains tax rate would be much lower. Actually, higher income people are paying more by deferring these gains. In addition, because of the limits on contributions to both IRAs and 401(k) plans a disproportionate percentage of total income can be deferred by lower-income individuals.

Consider these facts not mentioned by the Center for American Progress.  The $49,000 limit on contributions has not changed in three years.  Under IRS rules there is an overall limit of $245,000 (also not changed in three years) on eligible compensation.  Not chump change to be sure, but hardly in the million dollar income stratosphere.  So what does this mean, it means that regardless of how much you make the percentage contribution to your 401(k) cannot be based on more that $245,000 in pay.  So, even if you do earn the top amount, in a typical plan you would have to contribute 17% of your pay (assuming your employers adds 3%) to reach the maximum.  If you earned $100,000, in order to reach the maximum contribution you must contribute 46% of your pay (an amount not even permitted in most plans).  In addition, there are discrimination tests preventing highly compensated people from disproportionately benefiting from these plans.  Finally, the most highly compensated people often do not use the 401(k) plan or contribute only to the level necessary to receive the company match, typically 7 to 8% of pay. 

I do agree on some points. The tax laws are too complicated, we have too many tax advantaged “retirement” plans and they are underutilized at all levels of income. Every individual should have the opportunity to save tax-advantaged to a set percentage of his income up to an affordable (for the government) maximum. The tax benefits accrue in proportion to ones tax liability and the maximum assures the benefit is not skewed to the wealthy.

Let’s look a the broader picture of retirement income and include Social Security. Using the benefit estimator a person earning $50,000 who retires at the full benefit age in February 2011 receives a benefit for himself and a spouse of $23,595 a year or 47.184% of his last years earnings. On the other hand, a person in the same situation earning $100,000 receives a total benefit of $36,288 or 36.288% of his earnings. In addition, the person earning $100,000 paid twice as much in Social Security taxes as the middle-income person. Now there is real progression for you.

There are other tax benefits skewed to lower-income workers as well. For example, file a joint return, and you and your spouse have a combined income that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your Social Security benefits; more than $44,000, up to 85 percent of your benefits may be taxable.

In addition, tax laws limit the pension benefit that can come from a qualified (tax advantaged) trust. Under the only limited benefits are insured thus favoring the lower paid lucky enough to have a defined benefit pension. Under PPACA there will be no limit on the income subject to the Medicare tax. Individuals who receive a portion of their pension from outside of a qualified trust must pay Social Security and Medicare taxes, in advance, on the present value of the benefit they receive even if they don’t live to collect the pension benefit.

The point is, you cannot isolate one section of the equation and claim a lack of fairness. Scores of laws limit the benefits and increase the taxes paid by higher income Americans.

There are high, middle and low-income human beings and their entire economic situation is proportional to their income. Unless you believe that no American should have an income greater than the national average of $50,000 +-, income levels will always vary and that includes income in retirement.

Who isn’t for fairness? However, the idea that to be fair to one group of people you must be less fair to another is disturbing as is the concept that government is the judge in all these matters or that government has the responsibility to allocate each individual’s resources for personal matters such a retirement. I guess that is why I am right-handed.

The real concern is assuring that the folks on the lower economic rungs of society have an unhampered ability to rise to any level they are able to achieve.  The progressives in America who see success as being unfair should focus their attention on the decisions, life choices and behavior that keep many Americans from improving their lot in life. Instead of spending $2 billion on the next presidential campaign, put half of it into job training.

There is a simple reason why we cannot control health care costs

23 Jan

And here is the reason…

Nobody complains about the cost of health care rather they complain about their insurance premiums or their payroll deductions for health benefits.

Think about it, and then look at all the “reform” contained in the Patient Protection Affordable Care Act.

Honesty and civility, what’s the big deal?

22 Jan

Where did it come from?

Recently I was in the grocery store and when using my debit card to check out I asked the cashier how much cash back they allowed.  Fifty dollars she replied.  I then pressed $40.  The cashier handed me fifty dollars.  She was confused by me asking the top amount and taking less.  However, what was truly amazing was her reaction when I handed her the extra ten dollars and pointed out that I had only requested $40.  She thanked me profusely as if there was something unusual happening.  Apparently there was, as she explained that most people would not tell her about the extra ten dollars.

I had similar experience with waiters in the last several months.  I was not charged for a drink and I asked the server to add it to the bill.  Another time I pointed out an error in the math which raised my bill.

What’s the big deal?  Apparently the big deal is that many people, perhaps most if you listen to the people on the other end of the transaction, say nothing somehow rationalizing their windfall.   Who knew?

Repealing PPACA may be a bad idea…however

21 Jan

Enough already, give me a break

Organizing for America  is an interesting political organization. It never gives up the party line and rarely let’s the facts get in the way. Here is a recent e-mail I received. Note that insurance companies are the beneficiaries of repealing health care reform. Do you recall that during the health care debate PPACA was accused of creating a windfall for insurance companies by mandating coverage and subsidizing coverage for millions of Americans? But they do have a point that Republicans should note. Eliminating all the goodies will not play well in Hooterville.

Richard –

At 5:53 p.m. Eastern Time today, the House moved to repeal health insurance reform.

Every single Republican — all 242 — voted for repeal.

This is a vote for insurance companies. There is no other way to put it.

Because if the question is what is best for Americans, repeal would never come up: Health reform is already at work improving the lives of millions of people. Repeal will result in 32 million fewer Americans with health coverage — and add $230 billion to the deficit over the next 10 years.

Republicans in Congress need to know there’s a political price to pay for siding with special interests over the constituents in their districts.

We’re putting together a dedicated team of organizers and volunteers across the country to protect our progress on health reform — and we need 3 donations from xxx to make sure they have the resources they need.

Chip in $3 or more to support Organizing for America and help stop repeal before it’s too late.

The Affordable Care Act addresses and ends some of the worst insurance-industry abuses against families, children, seniors, and the sick – the cost of repeal would be steep:

– Families, many already struggling to get by, could lose their coverage if someone is in an accident or becomes sick — right when they need it the most.

– A woman with cancer could have her coverage stripped away because of a tiny mistake on a form.

– Pregnant women, children born with disabilities, and anyone with a pre-existing condition — as many as half of Americans under age 65 — could face discrimination or be denied coverage by an insurance company that deems them too costly.

– A senior on Medicare who falls in the “donut hole” in prescription coverage would once again have to make up that cost out of pocket — and start paying for all preventative care.

– The deficit would increase by $230 billion over the next 10 years — placing an unfair burden on our children and grandchildren and future generations who will have to pay for this mistake.

– Insurance companies could go back to working for corporate profit and CEO bonuses — instead of for the people who pay their premiums.

These cruel and unjust practices are exactly why we organized, donated, volunteered, and spoke out for months, helping to pass legislation 100 years in the making. It’s why we worked with the President and Democrats in Congress to reform a broken and unsustainable health care system.

Now, that progress is being threatened — and we have to do everything we can to protect it.

Organizing for America is running a full-fledged campaign to drive this message home in communities across the country. Our organizers and volunteers will be knocking on doors, writing letters to their local papers, talking to neighbors, and calling their senators.

Support from 3 folks in xxx will ensure we have the tools and resources we need to counteract and stop the repeal effort.

Please donate $3 or more today:



Mitch Stewart
Organizing for America

Paid for by Organizing for America, a project of the Democratic National Committee — 430 South Capitol Street SE, Washington, D.C. 20003. This communication is not authorized by any candidate or candidate’s committee.

Contributions or gifts to the Democratic National Committee are not deductible as charitable contributions for income tax purposes.

Now if Mr. Stewart had said, “The cost of repeal is too high, we will go back to the days of providing health care inefficiently, with many duplicate tests, unnecessary tests and costs rising at more than triple the rate of inflation.  We will revert to fee-for service payments that only encourage higher costs. In addition, if we repeal PPACA the true quality measures we have installed will be overturned,” we might cheer.

If he had said all of that and more like it, then his message would have been credible, but you see he can’t say any of that because the current version of health care reform does not address those issues or any of the most important issues related to health care reform.  Rather Mr. Stewart relies on the barrage of scapegoating and bunches of carrots held out for the American people that have characterized the debate.

As it is, PPACA adds greatly to the overall cost of healthcare in America without putting in place and structural changes that might improve quality and lower or at least mitigate costs.

Oh yes, he is also shamelessly using scare tactics and the false premise that PPACA can be reformed to raise money for the DNC.

The coming shortage of doctors…are we thinking out of the box?

20 Jan

An interesting opinion piece in the January 19, 2010 Wall Street Journal talks about the coming shortage of doctors and the cuts in funding for training that is being suggested.  The article points out that health care reform will create more demand, we have an aging population requiring more care and many doctors are nearing retirement. 

Health-care reform will add an estimated 32 million people to the ranks of the insured, driving them to seek medical attention that in the past they may have avoided due to expense. The aging population will also create much greater demand. The number of seniors who need more medical care is expected to soar to 72 million by 2020—nearly double today’s number.

According to a 2010 report by the Association of American Medical Colleges, the increased demand means that our nation will need an additional 130,000 doctors, both general-practice physicians and specialists, 15 years from now. That’s about 20% more doctors than we have currently.

These are all good points.  However, are we thinking out of the box on this one?  How many doctors does it take to provide the optimum care to the US population?  What type of doctors do we need and where are they most needed?  More important, are we setting our need on the current model which has thousands of doctors operating a small business or practicing in small groups?  Are we optimizing the use of physicians?  Sadly, health care reform did little to address the fundamental structure and reimbursement mechanisms in the health care system, so one wonders if merely throwing more money at the problem and training more doctors is the real answer or at least only part of the real answer.

We need to challenge fee-for service, solo practice and the misguided incentives and lack of coordination that go along with both.  It seems to me managing costs and raising quality would be better served with salaried doctors free to attend to their patients with no other distractions in a highly coordinated medical community.  Making a good income consistent with ones training, experience and results is a good thing. Making more money by providing more services is not. 

Is there any logic in providing the one service that most people are emotionally incapable of buying as a consumer on a fee-for service basis?  The bells will go off at the AMA at this idea and the assumption will be lower-income (and no doubt claims of lower quality).  Lower income for physicians is not necessarily a result of changing the system, but greater efficiency and higher quality may well be.


Repealing Obamacare, eh, not so much.

19 Jan
President Barack Obama's signature on the heal...

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I haven’t given much press to the Republican effort to repeal the Patient Protection Affordable Care Act because it is nonsense. Not only is it bad policy but it is dumb politics as well. In addition, we all know the President will veto any such law and the Republicans cannot override the veto.

However, if you are interested in the law repealing PPACA here it is.

PPACA needs a lot of changes, but wholesale repeal is not the answer unless and until there is a workable alternative that truly reforms healthcare in the United States. The Republicans do not have such a plan, the Democrats don’t and nobody else in Washington does at the moment. Such a plan will upset physicians and patients alike.

Who wants the changes that are really necessary?  Too bad we all don’t.

I am skeptical, if health and wellness programs work, if they save money for an employer…PROVE IT!

18 Jan

Oh no, they want facts and figures.

I am a skeptic, I do not think anything that employers have done have controlled health care costs. Oh yes, they have lowered their costs in some cases, but that only means they have shifted costs someplace else, usually to the employee and in minor cases to providers by lowering payments or restricting access.  After all is said and done, once the initial reduction is achieved for one party, costs resume their upward trend as usual.  I remember the good old days when pre-admission testing was the key, followed by second opinions for surgery, then we had to lower the length of stay for hospital admission and after that was successful, the cost per day continued to rise.  We tried HMOs and PPOs and screwed that up. 

Today we are on a quest for major cost shifting on one hand and a dream of a healthy workforce on the other.

The former is known as consumer driven health care or high deductible health plans and the later wellness programs.  The former seeks to shift more and more costs to the employee and family in a quest to have them shop for health care as they do a new car.  The later claims short-term results by making workers healthy through screening, education and various programs.  Nobody can argue with the desirability of helping people stay healthy and if lower costs are a benefit, that is great.  The problem employers’ face is understanding what is possible and proving wellness programs do work.  Most employers are riding the wave of PR and have no idea if they are now or will ever save money with a wellness program.  Two things come to mind that should be obvious to any employer.  First, unless dependents are one hundred percent included in the program, employers are missing any opportunity to manage about 60% of their plan costs.  Second, any savings to be realized will be years in the future.  An obese person to day may have zero health care expenses; a person with high cholesterol may have no symptoms for many years.  Will these people be your employee when the expenses actually occur?

Never have so many employers embraced an idea (a costly idea in many cases) without a clear way to measure results and to prove effectiveness. 

“We have a 90% participation rate in our health risk assessment (HRA)!  Whoopee, could that be because you charge a higher premium if the employee does not participate?  More to the point, what does a high participation rate actually achieve?  How many employees took action based on the results?  How much in healthcare costs were saved or avoided?  Did costs go up in the short run because of actions the employees did take?  How were the spouses affected?  Did absenteeism change because of the new information employees had about their health status?

Intuitively wellness programs are a good thing. I mean, how can they be bad?  If an employer wants to provide this kind of assistance, that is also a good thing.  However, if you are selling wellness efforts as a cost saving or productivity improvement vehicle…PROVE IT!

Following is an article prepared for Quinnscommentary on this subject.  Take a look.  If you are interested in measuring a wellness program, you may want to look at their website.


Wellness Program Observations

 By Shankar Sahai

Health Cost Intelligence

 Most businesses start with conducting a pilot program while rolling out a wellness program. A very sound strategy indeed. The pilot is planned well, executed meticulously and in most cases, results from it are considered successful. All is well and good! Next, the business either constructs results based on actual performance of the pilot or in some cases forms an “educated” opinion based on the mood of the administrators and executives involved with the pilot.  The program is rolled out to multiple sites over the next few months and all is assumed to be going great until after some months the management decides to look into the results from the rollout. In most cases, the management is in for a surprise since the results are not consistent with what was perceived during the pilot. There are several reasons for this, but some of the more important ones are that the general roll-out is not thought through, goals and objectives not well communicated to the responsible parties and not enough done to measure the progress of the program. According a leading source the spending on wellness programs is increased (35%) in 2010 over 2009 but only 35% of companies actually measured the benefits and progress of their programs. (Source:, Dated: Jan 2011)

The attrition rate is often seen as a major benefit for wellness programs in the workplace. It is worth noting the attrition rates in any company are based on several factors. Some of these factors are job expectations, pay, benefits, hiring process (is the right person being hired to do the job?) and many other factors. Wellness programs offered play a role in the overall mix. It’s never easy to isolate the impact of each factor on the attrition considering that no business stands still and certainly the environment around them is constantly changing from the rapidly changing economic reality to the more gradual change in the profile of their customers and applicant pool. The impact of wellness programs varies from one business to the next. In addition, in most cases, even within a company varies from one location to another. Hence, there is almost no trend around wellness programs and attrition that stands out. Each case is unique and must be looked at individually.

Another fact that customers looking for attrition payoff should expect is that an impact is seen around second to third year after rollout. In some cases, there may not be in any impact at all or there even might be a negative impact. In general, it’s advisable for a business with a wellness program to expect substantially lower results after general rollout than the ones seen during the pilot. In summary, most businesses will see benefit from the roll-out of the wellness programs and most will be able to improve the returns by tweaking and targeting their programs more efficiently.

Mismanagement of state pension and other benefits affects your discretionary income

17 Jan

But I'm a teacher, give me a break

Agree or not, the fact is that in many states a major contributing factor toward the level of your property and other taxes is the cost of state employee pensions and other benefits including retiree health care coverage. Sadly, the situation is not getting much better even though some modest steps have been taken to change benefits  (mostly applicable to yet be hired workers).

In New Jersey they have placed a cap on property tax increases of 2% a year – but guess what, if a town needs more to make its contribution toward public employee pensions and health benefits it can go above the cap.  What do you think will happen?

Aside from what most measures would define as generous benefits (especially when measured against the benefits of the people paying taxes to fund public employee programs), state politicians manipulate funding and thus understate liabilities. For example, what chance do you think you have to earn an 8% long-term annual return on your investments? That old and unrealistic assumption is still used by some state pension plans thereby significantly understating the liabilities for promised benefits. Sooner or later the real costs will have to be accounted for and paid…even higher taxes required.

When it comes to the promises made for retiree health care benefits, many states ignored or did not even know the billions of dollars in liabilities they had incurred.  Again, these benefits typically far outpace the comparable benefits in the private sector.

When someone questions this situation they are accused of attacking teachers, police officers and firefighters. That is a short-sighted strategy to divert us from the scope of the problem and the consequences of not fixing it. In fact, such a strategy is much like the AARP’s reaction any time there is an effort to effectively manage Social Security and Medicare.

You should be concerned, look beyond the rhetoric.

Little faith in cost predictions for health care reform

16 Jan
Health care reform supporter 4 at town hall me...

Image via Wikipedia

According to a new Rasmussen survey , 75% of Americans think that health care reform will cost more than predicted…and I thought Americans were hoodwinked. 

Every reasonable person in the United States should think health care reform will cost more than predicted simply based on the past track record of Congress. But if that is not sufficient, try common sense, the provisions contained in PPACA, human nature and the use of health care, the opinion of the Chief Actuary for Social Security and any other person who understands the nature of long-term promises based on politics.

Yikes the AARP makes a bundle off of health care!


Get off your duff and stand up! New research

15 Jan

The following is an excerpt from Bloomberg. Com

Even Small Breaks From Sitting Can Aid Heart Health, Study Says

Jan. 12 (Bloomberg) — Taking small breaks from sitting down such as standing for phone calls or walking to see colleagues may trim office workers’ waistlines and help their heart and metabolic health, a study suggests.

The more breaks people took, the smaller their waists and the lower the levels of a blood marker linked to inflammation, the research, published today by the European Heart Journal, showed.

The study is the first to look at the effects of remaining sedentary on the heart health of a broad swath of the population. The research tried to capture how much people moved as part of their daily routines, the lead author, Genevieve Healy, a research fellow at the University of Queensland, Australia, said in an interview yesterday.

“What we found was the more sedentary people were, the more sitting and the more reclining people did, the worse off they were in terms of cardio-metabolic function and inflammation, such as waist circumference, blood fats, lower levels of good cholesterol and protein inflammation markers,” Healy said.

Just imagine what a little real exercise could do?  The next time the boss says “Stay at your desk,” you say, “Hey, I’m working on wellness and saving you money in health insurance premiums.”

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