ACA Repeal: Here we go again

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According to one report, VP Pence has offered three changes to the repeal bill to win Freedom Caucus support for the Trumpcare bill:

  • Elimination of requirements for what insurers must cover
  • Eliminating coverage for pre-existing medical conditions
  • Eliminating limits on what insurers can charge people with medical conditions

Whether the bill can retain any support among moderates in the GOP with these changes is questionable. These provisions will cause problems for hospitals and healthcare providers, and result in more people having no health insurance coverage, and may allow a sharp increase in insurance prices for consumers, as the Congressional Budget Office has predicted.

This simply makes a terrible bill worse.


Sources:

  1. Marlene Satter, “Freedom Caucus would support health care bill that kills 3 ACA provisions,” BenefitsPro, 10 April, 2017. http://www.benefitspro.com/2017/04/10/freedom-caucus-would-support-health-care-bill-that?kw=Freedom%20Caucus%20would%20support%20health%20care%20bill%20that%20kills%203%20ACA%20provisions&et=editorial&bu=BenefitsPRO&cn=20170413&src=EMC-Email_editorial&pt=Consumer%20Driven%20PRO

What the CBO Report on the American Health Care Act Actually Says (updated)

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Photo Courtesy of Holden Police Department

By now. most people have seen headlines or soundbytes about the report.  The Congressional Budget Office is a nonpartisan group. The head of the CBO was actually appointed by the GOP. The purpose of the office is to provide Congress with a source of “objective” information about the financial impact of legislation that is independent from information provided by the Executive Branch. In a complex world, this actually makes sense.

 

What the CBO report actually says:

  • Health insurance costs for individuals will under the new act (the AHCA is also known as “Trumpcare”), will increase through the year 2020 and may decrease after that.  The CBO expects increases in health insurance premiums under the new law of between 15% and 20% for 2018 and 2019 under the new law.  However, the CBO argues that by 2026, premiums might be 10% lower than under the ACA.
    • Some professionals refer to these as “hockey stick” forecasts, with a positive result occurring sometime in the remote future.  That could happen, but usually unforeseen events preempt the desired result.
  • Healthcare costs should decline for people in their 20s, but will increase sharply for older Americans.  The proposed tax credits will be insufficient to cover the cost increase.
  • The CBO estimates a $337 decrease in the Federal deficit from the AHCA law, mostly due to the repeal of Medicaid expansion and the end of subsidies for health insurance.  (As noted, the tax credits are smaller than the current subsidies.)  That averages out to about $33.7 billion per year.
    • The current US deficit is $441 billion in the current fiscal year.  Obviously, any reduction is good, but a savings of less than 10% of the deficit isn’t a cause for celebration.
    • The US budget deficit is expected to expand by over $10 trillion over the next decade, after shrinking during the Obama administration.
  • The Medicaid rollback will cost 14 million people their healthcare coverage immediately.  That plus the increase in out of pocket expense will ultimately mean that 24  million people will be forced to do without health insurance.
    • The CBO expects that some states will lose Federal funding for Medicaid in 2020 by their failure to provide the matching funds required under the new law.  That will further reduce Federal spending.
    • The matching funds requirement simply moves part of the tax burden from the Federal government to the states, and may require increases in state taxes.
  • Existing law requires the CBO to provide guidance on the impact of the law on the economy.  However, the CBO claims it has not had sufficient time to do this.
    • My argument is that anything that takes money away from consumers will be a drag on economic recovery.  This law does, by raising health care out-of-pocket expenses for most people.

Sources:

  1. Congressional Budget Office, “Cost Estimate,” 13 March 2017.  https://www.cbo.gov/publication/52486 I’ve downloaded a pdf of the report from the CBO website, and will share it on request.
  2. Emily Stephenson, “U.S. deficit forecast to shrink in 2017 but climb over next decade,” Reuters, 24 January 2017.  http://www.reuters.com/article/us-usa-congress-budget-idUSKBN158217

The Employee Benefits Divide

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There are immense divisions in US society:ben_franklin

  • Rich versus poor
  • More educated versus less
  • Old versus young (ageism lives)
  • Urban versus rural (fading since most people live in urban areas, but still very real)
  • Ethnic and racial

We can add big employer versus small business to the list.

Large employers are adding benefits for employees that small businesses simply can’t afford.

American Express announced an increase in paid parental leave to five months with added surrogacy and IVF benefits, and Ernst & Young expanded parental leave from three to four months for parents of all genders and added adoption, fertility and surrogacy benefits.

Basically, if you have fertility issues, it really pays to work for one of these large financial services firms.

The larger division is a shift in focus in large companies from the cost of benefits to the total well-being of the employee. That shift has benefits for these companies in terms of worker retention and productivity.

Small companies pay a price for their focus on cost in terms of employee turnover, learning curves for new employees that affect productivity, and errors that affect customer relationships. However, they simply can’t afford some of the benefits that large companies can offer. Nor do they get the favorable pricing for benefits that insurers give to their largest clients.

The size divide isn’t clean. There are small companies that recognize how important their employees are.  I know of one diner (a class of eatery for which New Jersey is famous) that offers a good benefits package to staff, but that’s unusual in food service establishments.

Conversely, large retailers tend to treat employees as replaceable. In one recent study by the ACSI, retailers closing stores were seeing improvements in customer satisfaction ratings. My guess is the stores that were  under-performing had the lowest individual store ratings for customer satisfaction, but the ASCI data aren’t sufficient to address that.  Why not? Minimum wage employees with limited benefits and no career path aren’t motivated to deliver for customers. People do what they are incented to do.

What you need to consider:

  • Students need to think about the kind of company for which they will work in the future.  College is less optional if benefits matter.
  • Small businessmen need to get creative about ways they can invest in employees. The old mentality that “having a job is sufficient motivation” is simply a way to guarantee mediocre staff. Good people can always find another job. When there is turnover, the best are the first ones out the door.

Sources:

  1. Ann Clark, “Top 5 best work benefit trends for 2017,” BenefitsPro, 6 March 2017. http://www.benefitspro.com/2017/03/06/top-5-best-work-benefit-trends-for-2017?kw=Top+5+best+work+benefit+trends+for+2017&et=editorial&bu=BenefitsPRO&cn=20170312&src=EMC-Email_editorial&pt=Benefits+Weekend+PRO&t=employee-paid&page=2
  2. American Customer Satisfaction Institute, “ACSI: Retailers Improve Customer Satisfaction Amid Store Closings,” 28 February 2017. http://www.theacsi.org/news-and-resources/press-releases/press-2016/press-release-retail-2016

 

ACA Repeal: the idea of responsibility

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The legacy of healthcare muddies any discussion about what to do next.

  • What responsibility do individuals have to care for themselves and avoid burdening others?
  • Since Congress has created rules on exclusivity that have massively inflated pharmaceutical prices in the US, what responsibility does the government bear for making healthcare affordable?
  • What is the proper balance between public good and greed for health practitioners and insurers?
  • Since government regulation has created the malpractice mess and allowed the AMA to protect the small minority of physicians who are incompetent and careless, what obligations does the government have to consumers?

Neither the ACA nor the current repeal effort addresses the root causes of the current mess.  The House bill is unsatisfying because it’s a band-aid, not a cure.

Susan Combs, CEO of an insurance brokerage, offers an interesting perspective on ACA repeal.

“I know many people tout that requiring health insurance is ‘unconstitutional,’ yet you don’t hear people saying that in regards to auto insurance,” Combs says.

“It’s all about mitigating your personal risk and you have a duty to do so. The mandates help to balance out the risk pool. It is very important to have the high utilizers in with the young and healthy, this in turn helps to manage and control the costs.”(1)

The duty to minimize risk is recognized by the courts, but the US doesn’t do consistency well. On the one hand, we want people to live as they wish. On the other, we want to hold them responsible when their behavior affects others.  With healthcare, these desires clash. There are so many examples.

  • In general, when an uninsured individual needs healthcare, the cost falls on taxpayers. Is that fair?
  • The motorcycle rider who opts not to wear a helmet raises both motorcycle and health insurance rates for others.
  • The parent who chooses not to have a child vaccinated raises the risk of serious illness for others, and that impacts their health insurance rates.
  • People who are obese are at greater risk of a variety of illnesses, and are prone to later detection of disease, than those of standard weight.  Both the illnesses and delayed detection drive up the cost of care. That cost hits all insurance policy holders in a state.

What is the individual’s responsibility to mitigate risk? To oneself? To the group?

And yes, the government has aggravated the mess and has an obligation to undo the damage.  The current bill doesn’t address that at all.

A note on cost increases for insurance:

“I’m concerned about the age rating ratio changing from 1:3 to 1:5,” Combs says. “Many consumers don’t get that this means that if a 20-year-old was paying $200 per month for insurance, that a 64-year-old, on the same plan, is currently capped at paying $600 per month. With the new proposed bands, that would go up to $1,000 per month. The increased tax credits won’t scratch that surface.”(1)

Costs will go up and the tax credits will be insufficient to offset the increase.  They may be insufficient to motivate healthy individuals to buy insurance.

 


Sources:

  1. Claire McInerny, Erin Moriarty-Siler, “Benefits experts weigh in on ACA replacement,” Benefits Pro, 8 March 2017. http://www.benefitspro.com/2017/03/08/benefits-experts-weigh-in-on-aca-replacement?kw=Benefits%20experts%20weigh%20in%20on%20ACA%20replacement&et=editorial&bu=BenefitsPRO&cn=20170308&src=EMC-Email_editorial&pt=News%20Alert

Internet Insecurity Revisited

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Your applications encrypt your data.  You’re protected, right?ben_franklin

Wrong.

There are three things you need to know about the latest round of papers made public by Wikileaks:

  • The CIA (in some cases in partnership with UK’s MI5) developed ways to hack device operating systems. The devices include all types of computers and cell phones, networked TVs, car onboard systems — basically everything anyone uses that’s connected to the Internet. The operating systems affected are Windows, Android and Apple.
  • The hack allows the user to read data as it is entered (typed or oral), before it is encrypted.  Everything.
  • The hack allows users to control devices and use them for spying on device owners.
  • The CIA may have LOST CONTROL of these hacks, meaning that they are out in the public domain where others can use them.

The CIA might not care about you, but are there others who might want your bank account?

The revelations have shocked experts.

Still, the amount of smartphone vulnerabilities and exploits detailed in these documents was shocking even to experts. “It certainly seems that in the CIA toolkit there were more zero-day exploits” – an exploitable vulnerability in software not known to the manufacturer – “than we’d estimated,” Jason Healey, a director at the Atlantic Council think tank, told Wired Magazine. He added: “If the CIA has this many, we would expect the NSA to have several times more.”(3)

Early reports are that the documents published by Wikileaks appear authentic.  None of the companies involved have commented on the situation. Nor do there appear to be any patches immediately in the offing.  After all, none of the players is yet admitting that they have something to patch.

Some writers see a bright side in these revelations: the decision to hack operating systems means that data encryption tools work.  That may or may not be true.  We don’t know what is still to be revealed.

Security problems aren’t under control or going away.

“Anybody who thinks that the Manning and Snowden problems were one-offs is just dead wrong,’’ said Joel Brenner, former head of U.S. counterintelligence at the office of the Director of National Intelligence. “Ben Franklin said three people can keep a secret if two of them are dead. If secrets are shared on systems in which thousands of people have access to them, that may really not be a secret anymore. This problem is not going away, and it’s a condition of our existence.’’(4)

I’ve said that nothing on the Internet is private, but this takes that statement to an entirely new level.  Nothing you type or speak into an Internet connected device is private. 

Ben Franklin was indeed a very wise man.


Sources:

  1. Sharon Profis and Sean Hollister, “WikiLeaks and how the CIA sees your WhatsApp messages, explained,” CNet, 7 March 2017. https://www.cnet.com/how-to/wikileaks-cia-hack-phone-tv-router-vault-7-year-zero-weeping-angel/?ftag=CAD3c77551&bhid=25995825932822145966367556179766
  2. Jose Pagliery, “Wikileaks claims to reveal how CIA hacks TVs and phones all over the world,” CNN Tech, 7 March 2017. http://money.cnn.com/2017/03/07/technology/wikileaks-cia-hacking/
  3. Trevor Timm, “WikiLeaks says the CIA can use your TV to spy on you. But there’s good news,” The Guardian, 7 March 2017. https://www.theguardian.com/commentisfree/2017/mar/07/wikileaks-says-the-cia-can-use-your-tv-to-spy-on-you-but-theres-good-news
  4. Devlin Barrett, “FBI prepares for new hunt for WikiLeaks’ source,” The Washington Post, 7 March 2017.

Alternative Math

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17456_1269532813224_1076952025_30803996_7657050_nWe have “alternative facts” and now we have alternative math.

The Trump administration has proposed changing how the balance of payments number is calculated in order to support their case for trade restrictions and tariffs (taxes on imports).

Now the administration is projecting 3% annual growth in GDP for the next three years.  That’s substantially higher than the 1.9% estimate by the nonpartisan Congressional Budget Office for average growth over the next decade.  At best, the CBO estimates 2.3% growth in 2017, which is in line with the estimate from the IMF.  Kiplinger is forecasting 2.1% growth.  The Conference Board has a 2.2% forecast for 2017.

The last time tax cuts spurred major economic growth was in 1962, under a very different economic environment.  The record since with cuts has been erratic and overall much less productive.  Giving people money that they then invest in overseas markets does nothing for the US economy.

Why does the higher figure matter?

Higher growth means higher tax revenues to the government.  These higher revenues would offset reductions in tax rates for corporations and the wealthy.  Without the higher revenue, the current proposals aren’t “revenue neutral” and will produce a massive increase in the Federal deficit.

Which is precisely what fiscal conservatives don’t want to see.


Sources:

  1. Nick Thornton, “Economist cautions against lavish growth projections,” Benefits Pro, 24 February 2017. http://www.benefitspro.com/2017/02/24/economist-cautions-against-lavish-growth-projectio?kw=Economist%20cautions%20against%20lavish%20growth%20projections&et=editorial&bu=BenefitsPRO&cn=20170227&src=EMC-Email_editorial&pt=Daily
  2. International Monetary Fund, “World Economic Outlook Update January 2017”. https://www.imf.org/external/pubs/ft/weo/2017/update/01/
  3. “Kiplinger’s Economic Outlooks,” Kiplinger, February 2017. http://www.kiplinger.com/tool/business/T019-S000-kiplinger-s-economic-outlooks/
  4. The Conference Board, “The U. S. Economic Forecast,” 8 February 2017. https://www.conference-board.org/data/usforecast.cfm

 

Affordable Care Act “Repeal” — latest news

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“Repeal” has to be in quotes because it isn’t happening. Certainly not this year.  With midterm elections next year, the odds of repeal in 2018 aren’t good.  It will hurt too many voters.

As it is, what is being done is rather inept.

The Center for Medicare and Medicaid Services (CMS) issued a set of proposed rules for open enrollment for Marketplace health insurance for 2018 yesterday for public comment. The proposed rules use a rather flimsy excuse to cut the period for sign-up by half, from 12 weeks to six (1 November to 15 December, instead of 1 November to 31 January, the time period used for 2017).

(Please let me know if you want me to send you a copy of the CMS document.  Warning: it’s 71 pages.)

Given the inability of the Health.gov website and call center to cope with enrollment traffic in the longer time frame, this appears to be a blatant attempt to reduce the number of people who apply for health care under ACA (Obamacare).

They also are refusing to accept comments from the public online, citing a shortage of staff to handle comments filed that way — the Trump hiring freeze.

The is on top of the previously reported problem in deciding whether to continue subsidizing health insurance. Given that insurance companies file for approval of new rates in March and April for the following year, the lack of a decision means they will maximize the rates they request assuming the subsidies won’t exist.

The insurance industry has said that the lack of guidance will cause them to request increases of from 15% to 20% for individual health insurance.  The non-partisan 9781483454665_cover.inddCongressional Budget Office had previously estimated increases of 20% to 25%.

Either way, it means most consumers will see a cut in their disposable income in 2018, right before the midterm election.  Brilliant thinking on the part of Congress.    However, when you place ideology over common sense, that’s what you get.