Archive | December, 2011

Accountable Care Organizations (ACO) and the promise of savings without managed care or patient limitations.. I wish you all the best.

20 Dec

 Here is a text of an e-mail I received from HHS:

 Affordable Care Act helps 32 health systems improve care for patients, saving up to $1.1 billion

12/19/2011 12:01 AM EST

Thirty-two leading health care organizations from across the country will participate in a new Pioneer Accountable Care Organizations (ACOs) initiative made possible by the Affordable Care Act, HHS Secretary Kathleen Sebelius announced today.  The Pioneer ACO initiative will encourage primary care doctors, specialists, hospitals and other caregivers to provide better, more coordinated care for people with Medicare and could save up to $1.1 billion over five years

That headline really grabs you doesn’t it.  Seems like it’s a done deal and the savings are in the bank.  That’s far from the truth, of course. There is no new information here other than we know the names of some health care systems that will participate in this trial (“Pioneer”) effort for Accountable Care Organizations.  

Don’t get me wrong, this is a good idea because if there is one thing we need, it is more coordinated care, but we have a long way to go before we start patting ourselves on the back with a success under the Affordable Care Act.  We need it to work in terms of saving money and improving the care people receive.  That’s a tall order even for spin doctors.

I have one major reservation on the ability for this program to succeed and that is the limited involvement by the patient and the limited ability for the ACO to manage all of a patient’s care.  Working efficiently, the process should be virtually invisible to the patient, but that assumes the patient only uses health care providers within a given ACO.  Will the ACO that receives financial incentives to provide efficient care be reluctant to make outside referrals thereby losing some of the control over patient care?  In the long run there is no benefit to the ACO to do so, but this is one of the criticisms made of HMOs.  Here is what HHS says about patient rights.  I am concerned that we are again trying to have it both ways; efficient management of care and total freedom when seeking care.  I don’t think that can work, let’s hope I am wrong.

Beneficiary Participation

Under the Pioneer ACO Model, beneficiaries do not enroll in an ACO.    Primary care providers and other healthcare providers make the decision to participate in ACOs, meaning a beneficiary will not need to take proactive action to receive the benefits offered through an ACO.  ACOs are required to notify beneficiaries of their participation, ensuring the beneficiary is aware of the new arrangement, and his or her rights described in this document.  In addition, beneficiaries may affirmatively attest that their primary provider is in a Pioneer ACO, and can then be aligned with the ACO and benefit from the enhanced care coordination that it offers.

Beneficiary Rights and Protections

A beneficiary aligned to an ACO maintains complete freedom to visit any healthcare provider accepting Medicare, just as all Medicare beneficiaries participating in original, fee-for-service Medicare do.  These beneficiaries do not need a referral to see a specialist outside the ACO.   Unlike a managed care arrangement, like an HMO or a Medicare Advantage plan, a beneficiary aligned to an ACO is free to see any healthcare provider accepting Medicare at any time.  In addition, beneficiaries maintain all the benefits to which they are entitled in original, fee-for-service Medicare. 

Beneficiaries will have direct channels of communication to CMS to ask questions and relay concerns.  Through the initial notice of participation, beneficiaries will be informed that they can call 1-800 MEDICARE at any time to ask questions about the program,   alert CMS of any concerns they may have about the ACO.  Beneficiaries will also be surveyed each year to assess their experience with the new program.

 Here is a link to the list of the 32 organizations

Essential health benefits for exchanges left to states to determine

19 Dec

When ERISA was enacted a provision was included to exempt employer self-insured health plans from state regulation and mandates. This was done so that employers who operate in multiple states would not have to comply with scores of different regulations and mandates. There are about 1600 different state mandates related to coverage of health care services. Each of these adds to the cost of health insurance. Now the Obama administration has decided to take the opposite approach and allow each state to determine the essential health benefits to be used by plans within its exchange effective January 2014.

States will be allowed to base their essential coverage on one of several benchmarks.

Given the track record of enacting mandates promoted by special interest groups along with providing benefits to state workers considerably above competitive levels followed by private sector employers, this decision to defer to each state may well be a recipe for higher health care premiums.  That in turn translates to higher federal costs when providing the subsidies that are available to most families that will be used in exchanges.  In addition, the cost of mandates in excess of the essential health benefits must be defrayed by the state.  All of this is counterintuitive to affordable health care.

In effect, we are saying that government decisions on essential health benefits reflect what is essential to individuals, but that is not the always the case.  We are making this process  way too complicated.  Very basic, nearly catastrophic coverage should be the  standard. From there allow insurers to build higher level plans demanded by consumers who can then decide the coverage they need and can afford.  This is not the same as the current approach of starting with generous coverage and varying reimbursement levels.

Exactly what are we attempting to make affordable?  We appear to be starting with the Cadillac of coverage and working our way up.

Four Benchmark Plan Types

Our analysis of offerings that exist today suggests that the following four benchmark plan types for 2014 and 2015 best reflect the statutory standards for EHB in the Affordable Care Act:

(1)  the largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market;26

(2)  any of the largest three State employee health benefit plans by enrollment;

(3)  any of the largest three national FEHBP plan options by enrollment; or

(4)  the largest insured commercial non-Medicaid Health Maintenance Organization(HMO) operating in the State.

HHS intends to assess the benchmark process for the year 2016 and beyond based on evaluation and feedback.

To reflect the State flexibility recommended by the IOM, under our intended approach, States are permitted to select a single benchmark to serve as the standard for qualified health plans inside the Exchange operating in their State and plans offered in the individual and small group markets in their State. To determine enrollment in plans for specifying the benchmark options, we intend to propose to use enrollment data from the first quarter two years prior to the coverage year and that States select a benchmark in the third quarter two years prior to the coverage year. For example, enrollment data from for the first quarter of calendar year 2012 could be used to determine which plans would be potential benchmarks for State selection and the benchmark plan specified during the third quarter of 2012 for coverage year 2014. If a State does not exercise the option to select a benchmark health plan, we intend to propose that the default benchmark plan for that State would be the largest plan by enrollment in the largest product in the State’s small group market.

Essential Benefits — Who Decides? – Huffington Post (

The elimination of the $1.00 coin, pat me on the back, I did what common sense would dictate (sort of)

18 Dec
English: President Barack Obama walking with V...

Don't worry Barack, we are saving a place for you on the three dollar bill.

Let’s say you are sitting in your office and an employee comes to you and says he thinks he should stop producing widgets. Why, you ask. Well because there is a two-year supply in the warehouse and nobody is buying them. A two-year supply and you are still producing them, what the hell took so long for you to figure out you should stop production?  Well, you didn’t say you wanted to save money until last week. Get out you moron, you’re fired!

Now, let’s look at the pat on the back released by government on December 13th. Do you want to bet nobody gets fired.

As part of the Obama Administration’s Campaign to Cut Waste, Vice President Biden today announced the U.S. Mint would suspend the production of presidential dollar coins for circulation. Today, nearly 1.4 billion surplus dollar coins are sitting in Federal Reserve vaults due to lack of demand for the coins. By halting this unnecessary production, the administration will save taxpayers at least $50 million per year in production and storage costs.  The vice president made today’s announcement at a Cabinet meeting focused on the president’s commitment to cut waste and eliminate misspent dollars across the federal government.

Of course, the other alternative would be to promote the use of the coins or cut back on paper dollars to increase demand for the more durable coins. The coins cost fifteen cents to produce and last about forever.  The dollar costs 4.2 cents to produce and last from 18-22 months.  What is the best way to save money?

They use both one and two Euro coins and they are quite convenient.

Term limits for members of Congress are essential, please support the petition

16 Dec

All across the US and indeed the world governments and individuals are learning there simply is not enough money now or from future generations to fulfill all the promises made by politicians.

Some of these promises were made in a sincere attempt to help people, other politically motivated and still others simply poorly thought out dumb ideas. It doesn’t matter, they all have to be paid for.

For our part we citizens generally welcome this largess be it subprime mortgages, Social Security COLAs, tax credits or generous pensions. Others see social goals such as the environment as primary over economics. Again, it doesn’t matter why we accept all this spending, it still has to be paid for.

Politicians are forever going to act in ways that get them re-elected with long – term consequences being secondary. We need to change that and to limit the potential damage so that re-election is no longer a driver of spending.

In essence, we need to protect ourselves from ourselves.

Please consider signing the Term Limit Petition. We need 100 people to sign to get to the next step and time is running out.

Wyden-Ryan Medicare reform … Ah, not so much

15 Dec
English: Photograph of President signing the M...

With a stroke of the pen

I just did a quick read of this plan, so there is more to come.  However, let’s get one thing over now. It has no impact on current Medicare beneficiaries or anyone who will retire in ten years.

Beyond that I must say I am not impressed. That is unless you gauge achievement by the number of times you can use “quality, “affordability” and “competition” in a proposal.

The plan  relies on private insurers competing for Medicare customers and that is supposed to lower costs and improve quality.  We’ll see, but let’s not forget that even if you have five insurers in a state competing for customers, for all practical purposes they all must use the same doctors and hospitals as does Medicare.

A thought comes to mind, will the quality of care you receive from one doctor vary based on your insurer?  Will any innovative efficiency by Medicare or a private insurer not be used by all?
And what about the competition we already have among Medicare Advantage plans, why hasn’t that kept Medicare costs under control?

As I said,  there is much more to come as we get into the details, but it appears once again we are barking up the wrong “competition” tree.

Are Ivy League students as smart as we think?

14 Dec

I always assumed that kids who went to Harvard were smart, really smart, but now I have my doubts.

Read this quote from

Students of the eight elite colleges composing the Ivy League in the northeastern U.S., such as Sandra Korn of Harvard and Tom Moore of Cornell, are criticizing their universities for sending high numbers of graduates to Wall Street, rather than to jobs that emphasize community service. Careers in financial and consulting firms are frequently presented as the best or only option, said Korn, a sophomore majoring in history of science and gender studies who participated in the Nov. 28 protest.

Or how about this one:

About 22 percent of Harvard 2011 graduates who planned to enter the workforce were headed into finance and consulting, down from a high of 47 percent in 2007, according to a Harvard Crimson survey published in May. Half the students entering those fields said they would have chosen to work in other professions if salary weren’t a concern.

If salary weren’t a concern, duh ya think?  Somebody just paid $200,000 for you to get an Ivy League degree so perhaps salary is a concern.  I guess if you are majoring in the “history of science and gender studies” you haven’t been exposed to the real world, but guess what, you need money to do good things too.  If you want a career in community service, that’s great. If you see your calling teaching other people to study genders, be my guest.  However, expect your fulfillment in life to be largely non-material and that’s fine too, but don’t complain about forever being part of the 99% or perhaps the 50%.   And don’t expect other people to keep paying your way as may have been the case in college.

English: Harvard Yard winter 2009.

Keep in mind as well that the huge endowments Ivy League schools enjoy that enable them to offer courses in obscure fields of study and to conduct research came not from the history majors, but rather the one percent. You know, the people who make the tents you occupy in, the smart phone you text with and the malls you shop in, the movies you enjoy and the car you drive.  And while we are talking about endowments, let’s not forget they are invested with those Wall Street types you so despise as are the pension funds for millions of Americans.

I guess if you are twenty-something we can give some slack when it comes to your naive outlook. However, one has to wonder how much the negative blame game being played by our President influences such disconnected perspectives.

Here is a message for those concerned students. Become a politician that does the right thing and does not make a career of social engineering that gets our country into fiscal trouble.  Be one who is honest with people and does not make promises that create trillions of dollars in liabilities for future generations. And, oh yes, use that great education to think and analyze beyond the headlines, rhetoric and sound bites.

What I learned in basic training

13 Dec

They more I hear the “I can’t” attitude that seems pervasive these days the more I recall lessons I learned long ago.  Two lessons from basic training in 1964 come to mind.

The obstacle course always presents a challenge, but a lack of attention, creativity and innovation can make any obstacle more difficult. Standing at the starting line you look at a daunting array of stone walls, fences, gullies and barbed wire. You are instructed to overcome the obstacles and reach the other end as fast as possible. The only rule is you must stay within the boundary markers.The majority of recruits charge off over the first stone wall heading toward the barbed wire while the more observant realize the boundary markers are three feet on either side of the obstacles and the quickest and safest route is to run up either side. Thus those who looked for alternatives to overcome the obstacle reached their goal sooner and unscathed.

Another course requires crawling under barbed wire and avoiding bunkers containing explosives while machine guns fire live ammunition over your head. This is especially nerve-racking at night when tracer bullets are used. The instructors tell the recruits the machine guns are pointed three feet above the highest point on the course. That is little comfort unless you look carefully at the pole rising six feet above the machine gun platform, the highest point on the course.  In other words assuming the worst without assessing the full situation can be risky and inhibit your forward movement.

In today’s world we would probably blame someone else for not making all this clear before the start of the challenge. It’s just not fair that the more astute were able to take the less difficult route. No doubt that 1% of recruits hampered the others progress.


Social Security payroll tax cut; bad policy made worse by bad logic

13 Dec
Franklin Delano Roosevelt, 1933. Lietuvių: Fra...

You're doing what to Social Security funding?

It’s nice to know I am not alone worrying about the difficulty removing the “temporary” cut in payroll taxes once ingrained in the economy. Take a look at this excerpt from a recent article in the San Francisco Chronicle:

Social Security advocates say they fear these cuts won’t be the last. It may not be any easier for Congress to allow them to lapse next year, with the elections in November and the unemployment rate projected by the Congressional Budget Office to average 8.5 percent. Forcing the government to tap further into general revenue could lead to the kind of funding fights that Social Security has avoided until now.

Representative Jerrold Nadler, a New York Democrat, said he supports extending the payroll tax cut, though reluctantly.

“To take it away would be a body blow to the economy,” said Nadler, who called the tax cut a “very bad” change in Social Security policy. So “we’ve got to live with it for another year or two.” Massachusetts Democrat Barney Frank said that while he didn’t like the tax cuts initially, it would be a “great mistake” not to continue them now.

Some critics of Obama’s proposal say their wariness stems from Social Security’s unique character. It was designed in 1935 by President Franklin Roosevelt to be an autonomous program that paid its own way through a dedicated tax.

So you see the trap, you approve something you don’t like, that’s “very bad” and then it becomes a mistake you have to live with,even though it remains bad policy. This is especially true when Congress tinkers with taxes. Increases can’t go away because they are relied upon for government spending even when they are supposed to be temporary or limited. Decreases can’t go away for the same reasons except replace “government” with taxpayer.
This is what happens when all thinking and policy setting is focused short-term or more accurately on the next election.

Early Retiree Reinsurance Program (ERRP) money is gone. Five billion dollars from the federal to state governments. What did we get for our money?

12 Dec

The Early Retiree Reinsurance Program was supposed to reimburse employers for some of the health insurance claim costs for retirees through 2013 until the Affordable Care Act exchanges were in place.  CMS has announced that $5 billion allocated for the program has run out and that claims incurred after 2011 will not be accepted. It appears the administrations earlier estimate how long the funds would last was off just about a year.  Here is the CMS release:

The Early Retiree Reinsurance Program (ERRP) was established by section 1102 of the Affordable Care Act enacted on March 23, 2010. Congress appropriated $5 billion for this temporary program and directed the Secretary of Health and Human Services (HHS) to set up the program within 90 days of enactment. By law, the ERRP is scheduled to end when its resources have been used to pay claims. Due to the significant response among the employer community, the Administration’s budget released in February 2011 projected that the funds would last through fiscal year 2012, which started on October 1, 2011. The program ceased accepting applications for participation in the program on May 6, 2011. On November 18, 2011, CMS notified plan sponsors that total payments reached $4.1 billion. On December 9, 2011, CMS notified plan sponsors that $4.5 billion had been paid and issued further guidance informing plan sponsors that claims incurred after December 31, 2011 will not be accepted.

Where did the money go? It went to a wide variety of employers of all sizes, but interestingly, if you scan the list of recipients you will find that most of the money went to state and local governments, including school districts (reflecting their large numbers and generous early retirement programs).  A few very large corporations such a Verizon, Prudential and Johnson & Johnson received sizeable checks as well.

The City of Minot in North Dakota has over 2000 plan participants and has received $112,933 in ERRP reimbursements. As a direct result of these reimbursements the City was able to reduce 2012 premiums by 17 percent.

And what will happen in 2013 when the premium increases will have to cover the shortfall created by artificially reducing premiums in 2012 in addition to the increases being generated over the next year? Wait until these organizations see a compounding of their premium increases in 2013, it will be like the middle class receiving a tax increase because the Social Security payroll tax is reinstated.

In the final analysis, what did the American tax-payer get for his money?  The purpose of the ERRP was to encourage organizations to retain early retiree coverage.  However, state and local government plans and large corporations, especially those heavily unionized, are very unlikely or completely unable to cease providing early retiree health care coverage, certainly not  before 2014.  So what we have is a transfer of federal (borrowed) money to the states, local government and mostly large corporations creating a windfall serving a very questionable purpose.  It is true that some retirees also saw a small benefit in all this, but that too is temporary and any reduction in their cost will quickly disappear.

That $5 billion could have been spent in more productive ways.

President Obama and his nation of lobsters

10 Dec
President Barack Obama and Warren Buffett in t...

Sure, I enjoy a good lobster now and then

The President seems to be on his tear down America tour again. Nothing works because big business, banks and Wall Street are too greedy and corrupt and the middle class has no chance to move up.

He says the idea that big business and the wealthy can raise the tide for all just doesn’t work and never has. If the American system of capitalism never worked how did America become the greatest, wealthiest most powerful nation in the world in just short of 250 years? Sure, there were bumps along the way, as a nation we did some terrible things to many people, everyone didn’t always play fair, there were winners and losers along the way, but every person in America did benefit from the rising tide, every person had (and still has) opportunity and even the least advantaged among us are better off than most of the people in the world.

You can find fault and justified criticism of all the great industrialists and robber barons in our history. Ford, Firestone, Vanderbilt, Carnegie and all the rest took advantage of our system, took advantage of labor, but would we have what we have today or be better off without the likes of these people or what they ultimately accomplished for America under our free market system?

This President delights in finding scapegoats in an ever ongoing effort to pit Americans against one another either to deflect the real cause of economic problems or advance a far left agenda.  Over the centuries Jews, Gypsies, American Indians, the Irish, African-Americans and many others have been the victims of scapegoating to further someone’s political agenda. This President focuses on the wealthy (defined in interesting ways), business, Wall Street, banks, insurance companies, and the supreme court as his targets, all the while avoiding a positive, work together, we can succeed message about America.  He sees success in tearing down rather than building up.

Mr Obama finds comfort in blaming someone else; his predecessor, Congress (mostly any part of Congress that doesn’t agreee with him) and the 1%.  I am looking for an example of a CEO who kept his job very long using the problems he inherited when he took the job as an excuse for not raising earnings, revenue or market share. To be fair Mr Obama doesn’t know how to act like a CEO, he is after all a career politician and nothing more.

Free lunch? Let me at it, I'm not afraid of no stinking boiling water

Populism sounds great in auditoriums, but the reality is it doesn’t work because promising more and more on the backs of others is a false promise. The lobster enters a trap for a free lunch and ends up being someone else’s not so free dinner. The lobster can’t figure out how to let go and back out the same way he came in.

When Americans hear the ongoing drone that taxing the “wealthy” will raise them up and give them more opportunity, they should ask exactly how that is going to happen.  How will Warren Buffett paying an effective tax rate of 35% rather than 17% create jobs, cause US manufacturing to grow and make American goods more competitive on the world market?  If you could assure that no American could make more than $250,000 a year, would that make you feel good or would you say, “”Hey, someday I would like to earn more than that.” or “I hope my kids do better than that.”

I send a donation each month to a school that gives a free education to inner city minority children and then gets them scholarships to the best private high schools in the state with most going on to college also on scholarships. If you believe in the Obama rhetoric, then you must also believe that my monthly donation would be put to better use paid as taxes to the federal government. That is the essence of the issue.

No, everyone cannot be left to simply fend for themselves, nothing is right-wing simple. We need some safety nets, some national strategy and some regulation to assure fairness, but we also need individual responsibility and accountability.

To play on the theme that my life is the result of someone else or some system being unfair to me is the biggest trap of all.  Little in life is not the result of our own actions or inactions.

President Obama should be ashamed trying to make us a nation of lobsters

When will it be a good time to raise the Social Security payroll tax?

8 Dec
Roosevelt Signs The : President Roosevelt sign...

It's insurance I said!

 This year’s 2% payroll tax cut was paid for by increased deficit spending. In other words we “temporarily” turned Social Security from a self-funded program into a Congressional budget allocation funded by more debt. That is exactly the opposite of the original design of the program.  On this path Social Security becomes another form of welfare subject to the political whim of each new Congress . . . but it’s only temporary. When you look on your paystub you will see “FICA” opposite the deduction for this tax.  Do you know what the I stands for?  It stands for Insurance, the Federal Insurance Contributions Act.  Messing with something that is supposed to be insurance funded by employer and employee contributions is nuts.  It undermines the very essence of the Social Security system for political expediency and places its funding not with the beneficiaries, but at the mercy of Congress.

Some ideas to pay for extending and enlarging this tax break, and I use the term loosely, include raising airport fees, gasoline taxes or taxes on other parts of the economy.  Even someone like me who got a C in Econ 101 can see the irony of this; raise the cost of gasoline… that should help the middle class. 

The many promises for this 2% tax break; new consumer spending, job growth, etc., we’re so successful politicians want to do it again also on a “temporary” basis. This time they want to raise the success level by cutting the tax rate to 3.1%, fully half the worker portion of 6.2% needed to fund Social Security (well, more is actually needed but that’s another story). This time they are actually going to pay for it by increasing taxes someplace or cutting spending someplace else thereby allowing some other federal money to be transferred to Social Security where it can be used to buy Treasury bonds to fund ongoing deficit spending, just like the payroll tax.

Social Security Poster: old man

Nothing to smile about now

Given this is all “temporary” (like the estate tax in 1918) what’s the big deal?  The big deal is what happens at the end of 2012?  Will the middle class be able to withstand a 3.1% tax “increase” then better than a 2% “increase” now?  Has the average beneficiary of this entire stimulus absorbed the 2% into their standard of living? Have they incurred new debt based on their new-found ability to repay?

To date we have sent stimulus checks to most Americans, we lowered their out-of-pocket health care costs, gave them tax credits to buy a car, a house, put in central air, new windows and I lost track of what else, now at the end of 2011 we are told diverting another $550 a year from Social Security to lower the average family tax bill will do the trick.

These tax games may be temporary, but it appears common sense is gone forever. 



Will Obamacare, PPACA, Affordable Care Act save money and if so, for whom?

7 Dec

Much has been written, discussed and debated about health care reform.  Even more has been promised in terms of savings and making health care “affordable,” but what does it all mean?

Will there be savings and how will any savings generated benefit you? Read my assessment of the situation for a definitive answer to this important question.

Will health care reform save money and lower costs?


Death panels just wont die…another bogus e-mail is circulating, be careful what you pass along

6 Dec

I am beginning to think one can make a career out of debunking the nonsense e-mails that people believe and pass along or perhaps there is a fortune to be made writing this garbage.

In any case, here is the latest (unedited). Need I state emphatically that none of this is true or even logical? It is rather another attempt by ignorant people to undermine the affordable care act without the slightest understanding of what it is and is not.  Apparently the caller, also called other conservative talk shows as I heard a recording from the Mark Levine show as well.

The Bogus E-Mail


Before I finally decided to write this I had to think about it for some time as I know you are busy with the Thanksgiving day upon us but I felt it was important enough to write about it anyway.

I was listening to the Jerry Doyle radio program and he received a call from a listener that was completely different than the subject being discussed. Before Jerry Doyle allowed the caller on the air he had his call screener verify the callers credentials. The caller was a Neuro Surgeon and he had just completed a seminar in Washington DC which included a talk from a government official who was part of the set up team implementing the new Health Care Plan. He said they were told by this government official that starting in 2014 that anyone at the age of 70 or older with a major medical problem such as a stroke, heart attack or brain aneurysm as examples and will require an operation that the doctor will have to obtain approval from a government commission before the doctor can operate. He also said that the patient will be called a unit, not a patient. The commission will consider the age, other medical problems and cost before authorizing the operation on the unit. If the commission, who by the way are NOT doctors, deny the operation the only thing the doctor will be authorized to do is to – ready for this – make the unit as comfortable as possible until death. If the doctor operates anyway fines and sanctions would be taken against the doctor.

It wasn’t but a couple of minutes when Jerry Doyle received another call from another doctor who had been at the same seminar who verified what the previous doctor had said. This doctor added that the question was asked if this was the death panel that some had said was in the health care bill and the answer was, “We do not consider this a death panel but one of the ways they are going to reduce medical costs”. Both doctors said that they asked where they could go to read about this and they both said that there will not be anything published until the Health Care Bill is fully operational starting in 2014. That will be when all of the rules and requirements will become the law and made public. They were also told that none of this will apply to past, present and future congressional officials or those in the executive branch which past, present and future Presidents and Vice Presidents. When the health care bill was written this was one of two (2) exceptions. The second exception was – better be ready for this one also – ILLEGAL IMMIGRANTS! The rational behind this is being they are NOT United States Citizens that the law will not apply as it will only apply to United States Citizens or those in our country legally.

I know that some of you will read this and some won’t, some will believe this and some won’t but I hope that all of you do read this and believe it as I believe it is true. I have not heard anything else about this since the two doctors called Jerry Doyle’s radio program but there is no doubt that it won’t be long until the word about this gets out and hopefully this will help to terminate the so called health care bill. If you vote PLEASE vote intelligently as your life WILL depend on it this election.

If you want the facts on the only commission mentioned in the affordable care act including its mission and what it can and cannot do, go to this post on my blog.  The death panel, take a closer look

While the above e-mail is rubbish, the fact is that Medicare spends nearly 30 percent of its budget on beneficiaries in their final year of life. Slightly more than half of Medicare dollars are spent on patients who die within two months… and that must change if we have any hope of managing costs.

Are your taxes going “up?”

6 Dec

From the AP:

The president has been seeking an extension and expansion to the payroll tax cut that will expire at the end of the year. The White House says taxes on the average family would increase by $1,000 if the cuts are not extended.

To make its point, the White House went so far as to put up a countdown clock during spokesman Jay Carney’s briefing to show when middle-class taxes would go up “if Congress doesn’t act.”

Fiddling with the isolated stream of Social Security revenue is a bad idea, we’ve talked about that before.  But it is also a bad idea to propagate false concepts and politically expedient rhetoric. If the scheduled expiration of a temporary reduction of the payroll tax on December 31 is a pending disaster, what will we call it on December 31, 2012?

According to the President, extending the tax reduction “Will spur spending. It will spur hiring and it’s the right thing to do.”  That’s a tall order for a tax reduction that has been in effect for a year with little or no such effect.  The latest version of paying for this is a lower temporary surtax on millionaires and new fees on lenders.

And then we have this from the White House:

Good afternoon,

It’s simple. If lawmakers don’t vote to extend the payroll tax cut, taxes for 160 million Americans will go up on January 1st.

President Obama just left the press briefing room at the White House where he called on Congress to extend the tax cut, pay for it responsibly, and expand it so middle class families get a $1,500 break next year.

He told Congress to put country before party and stop wasting time.

Every day, folks are fighting to make ends meet and businesses are working to keep their doors open. The longer Congress waits to extend the payroll tax cut, the more uncertainty it creates for ordinary Americans. So we’ve put a clock on every page of the White House website, counting down the days, hours, and minutes until taxes for the middle class increase. In the briefing room, where the President just spoke, that same clock is ticking down as well.

And to make sure you have the information you need to know exactly what this means for your family, we’ve put together a calculator to show how much of your money hangs in the balance.

This calculator illustrates for you what nearly every independent economist has said: letting this tax cut expire will be a blow to the economy. We can’t let that happen. Now is the time to make a real difference in the lives of the people who sent us here.
Check it out and pass it along:

David Plouff

Senior Advisor to the President

The clock is also ticking on a 27% reduction in  fees paid  to physicians treating Medicare patients. If that is fixed how  will it be paid for?  Perhaps a new temporary tax on health insurers, that won’t have any negative impact on anyone.    The estate tax was supposed to be temporary and the AMT was only to affect a handful of people who escaped paying any income tax.  Politicians have no common sense and economists find a way to validate that.

Your pension may be at risk. You CAN lose all or a portion of your pension…even if you are already retired

5 Dec

ERISA, the Employee Retirement Income Security Act, had its genesis in the failure of the Studebaker car manufacturer when the pensions of its workers we’re wiped away with the passing of the company.  ERISA included the establishment of the Pension Benefit Guarantee Corporation (PBGC) a government agency funded by premiums paid by pension plan sponsors, well partially funded, the PBGC is not in great shape itself in terms of assets versus liabilities. 

If you would like to see the issues facing the PBGC and what Congress is considering doing take a look at this:  Congress and the PBGC 

While ERISA imposed new minimum funding standards on pension plans, employers don’t or can’t always comply. The result is that if a pension plan is terminated with insufficient assets to cover liabilities or an employer goes bankrupt, the PBGC steps in to make up the difference for retirees … up to a point that is. 

For example, a 65-year-old retiree is guaranteed up to $4,653.41 in monthly payments from the PBGC in 2012 should the agency take over his or her plan. On the other hand, a 55-year-old retiree is guaranteed just $2,094.03 (both based on the age at which a person retired).  Any amount above those limits is lost, you had it and now you don’t. Participants who have earned a benefit but are not yet eligible to retire have even more to lose. 

The situation is worse for anyone who earned above the amount permitted under federal law for pension purposes. In 2011 the annual compensation limit is $245,000 (it’s adjusted periodically, for example: 1990=$209,200, 1995=$150,000, 2000=$170,000 and 2005=$210,000). That means any earnings above the annual compensation limit cannot be used to calculate a pension in a qualified plan, the benefit cannot be funded in a pension trust and is not guaranteed. 

So, if you happen to be in the same pension plan as employees earning $100,000 and you are fortunate to earn $300,000 you better hope your employer stays in good financial shape because the pension you earned is at risk if the employer goes bust.  Unlike a qualified pension trust, money put aside to pay pensions earned on income above IRS annual compensation limits is not protected from creditors. Remember, these are not extra pensions; they are based on the same formula used for all plan participants. It’s just that you earned too much and I guess you need to take your “fair share” of risk. 

Here is the bottom line, regardless of your income; at least a portion of your pension could be at risk if your employer or union is not adequately funding your pension. This is something you want to pay close attention to. What percentage of the promised benefits is funded in the pension trust?  Is the employer making required funding contributions today?  This information must be made available to participants once each year through the Annual Plan Funding Notice.  

The lack of adequate funding is going to wipe out a significant portion of the pensions earned by American Airlines (AMR) employees just as it did for United Airlines several years ago.

Here are the results of one study. 

The funded ratio of the Milliman 100 pension plans increased slightly during 2010, reaching 83.9%. The aggregate pension deficit of $231.6 billion had decreased by $12.4 billion during the 2010 fiscal years, partially reducing an aggregate deficit of $244.1 billion at the end of 2009. 

Many employer plans are far less funded as a result of employer actions and the decline in stock values. States are among the poorest funded plans, but then a state doesn’t go out of business. 

Read this from The Atlantic: 

The Incredible Shrinking Public Pension Funds

By Megan McArdle

Apr 9 2009, 4:38 PM ET 36

America’s public sector pensions have been a scandal for years.  It wasn’t that long ago that they finally got around to doing their accounting the way that normal pensions do:  by showing how likely their assets were to generate enough revenue to pay for future benefits.  When they did, we found out what critics had long been claiming:  many pension funds for state and local governments were disastrously underfunded.  Politicians had gotten into the habit of promising generous pensions as a “cheap” giveaway to powerful unions…

This is not, it should be emphasized, exclusively a problem of public sector pensions; private firms are also underfunded.   But the scale is vastly different.  According to the Pension Benefit Guaranty Corporation, which regulates and insures pensions, the total deficit in private plans covering about 34 million workers was a little over 10 billion as of September 2008.  That’s almost certainly multiplied quite a bit since then.  But the current underfunding in public plans, which cover about 22 million workers, seems to be something north of a trillion dollars.  And they’re not insured.

All this provides a good lesson. Too much of a good thing may end up being nothing. When an employer finds itself in decline, it behooves unions and management to deal with the problems before the PBGC starts writing partial pension checks that make retirement a struggle for many workers…or states start diverting money from other programs or raise taxes.

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