A Health Care Debacle…

Coming to an insurance office near you.  Massachusetts is having some serious issues with its insurance system and extensive government regulation.  The Massachusetts system has been praised as having provided the structure of the Obama Health Care Reform.  Therefore it is only logical that we find ourselves looking at the Massachusetts system and its problems as a precursor of things to come as we move towards full insurance coverage.

What has happened is that Governor Patrick has imposed price controls on insurance premiums in the small group market.  In Massachusetts any increases in premiums must be approved by state regulators and Governor Patrick kicked off his reelection campaign by summarily rejecting 90% of insurance company requests for premium increases.

The despicable aspect of this move is that it is a political stunt, pure and simple.  Governor Patrick’s opponent in the November election will most likely be Charlie Baker, a former Executive at Harvard Pilgrim, a health care provider.  The political logic is simple:  tell insurance companies no price increases, they stop selling insurance, turn to the people and say “Look, Charlie Baker ran insurance companies that are now refusing to sell you insurance as the law requires!  Do not vote corporate greed into office!”

The result of these price controls is that the entire small business and individual health insurance market has been shut down as companies wait out the result of a pending court hearing.  They have argued that an arbitrary cap will result in more than $100 million in losses and threaten their solvency.  3 of the 4 largest insurance companies in Massachusetts are nonprofits and run the risk of collapsing if they are unable to meet the cost of claims.

Since the Massachusetts insurance system was put in place health care costs have skyrocketed.  Interestingly enough the requirement to allow everyone who applies the opportunity to receive health insurance has resulted in gaming of the system.  Blue Cross Blue Shield has reported they are tracking short-term customers who get on the system, immediately rack up costs on average 600% higher than normal, and three months later drop insurance all together.  Harvard Pilgrim has reported that 40% of new enrollees stay for fewer than 5 months and rack up costs north of 600% above average.

The Massachusetts problem is a microcosm of what America is in for if Obamacare is allowed to come completely online.  Massive health care regulation is not going to result in decreased premiums and health care costs.  Allowing the markets to work with less government regulation will.

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Health Care and Trade

Unfortunately I will be unable to get one of the blogs I have been sitting on up today.  I do want to give you an update and let you know that I have a blog on Health Savings Accounts (thank you Dr. Newell), one on the state of the near-universal health care in Massachusetts, and another on US exports, tariffs, and potential trade wars.  There are exciting things brewing!  I will keep you posted.

While you are waiting for those stirring posts I want to turn your direction to this article from Nowhampshire.  The gist of it is that a leaker from inside the New Hampshire Democratic Party has leaked that the party is in the process of recruiting liberal activists to attend tea party rallies carrying signs expressing “fringe sentiments.”  The source believes that party leaders are afraid the “Tea Party” movement will overwhelm them and they are seeking to discredit them as quickly as possible.  Since the fringe liberal activists are so adamant that Tea Party members are racist pigs I can only imagine what racist signs we will find at Tea Party rallies attended by these activists in the near future.

While attending the Southern Republican Leadership Conference in New Orleans this past weekend I was surprised at the emphasis the Republicans were making to unite the Tea Party movement and the Republican Party (both of which share a conservative base) and the number of times Republicans were warned to defend their Tea Party friends from Democratic attacks aimed to separate the Tea Party movement from the Republicans.  I think this is a small piece of evidence that the Democrats and their liberal activists will stop at nothing to prevent a loss of power to Republicans.

Doctor Shortage

Yup, you heard it here that it may be a problem and now we see that it already is.  As the ranks of insured expand we will see an approximate shortage of 150,000 doctors, mainly primary care doctors, in the next 15 years, according to medical experts.

Part of the problem is that medical money is wrapped up in testing due to how our insurance system is currently set up (more on this to come), leading many doctors to go into very specialized fields.  Between 2002 and 2007 the number of medical school applicants entering family medicine fell by more than a quarter.  This drop will more than likely mean longer lines to visit your primary care physician, especially when the millions of uninsured are finally insured under Obamacare.

Do not take this as a critique of doctors because they are behaving rationally.  This is a critique of the system currently in place.  This is the way the system is currently set up:

Employer-Provided Family Benefit

(Husband and Wife, no Children)

Annual Expenditure Employee Pays Employer Pays
1st $800 $800 $0
Next $8800 $1600 (20%) $6400
Above $8800 $0 ALL

This is what this means:  For all medical expenditures, you, the employee, pay the first $800.  This is more commonly known as the deductible.  For the next $8000, the employee pays 20%, or $1600, and the employer pays 80%, or $6400.  Everything above that $8800 mark, the employer pays for all.  To use an illustration Dr. Newell used in class, image this product which your employer provides for is food.  What would you be tempted to do?  Overindulge is correct.  You would as quickly as possible get to the $800 mark so that your employer picked up the slack and then everything after that would be mostly paid for by someone else.  If this was me, Megan and I would be eating Outback Steakhouse, Olive Garden, and Texas de Brazil all the time.  Why?  “Because I am not paying for it baby!”

The same concept applies to your health insurance.  Once you reach a certain level, as long as you (or more commonly, your employer) are paying for your insurance you can have as much testing, as many name brand prescription drugs, and as many doctors visits as you want and all you will have to pay in the course of a year is $2400, no matter how much you use it.  The incentive is to overindulge, resulting in higher health care costs.

The problem Obamacare is (at least overtly) seeking to combat is the rising cost of health care.  The reality is that his “reform” does not reform anything, it only regulates.  If we really want to reform we must change the system itself.  One way to do this is through Health Savings Accounts, which have been used with some success by Indiana state employees.  Mitch Daniels, the current governor of Indiana, was the leader of the state when they moved to these Health Savings Accounts as an option for all employees.  What Indiana does is deposit $2750/year in an account that is completely controlled by the employee.  So when they need a prescription, they can ask for a generic (and save a bundle) and make cost conscious decisions about testing.  The savings this is generating for the state in health care costs is truly startling considering where health care costs have been going.  Even more encouraging is that a whopping 70% of Indiana state employees opted into the system!  Why?  Because when the year ends, they get to keep everything left in their health savings account.  There are numerous tax advantages to a Health Savings Account, which you can read about here.

If we truly want lower costs then we need to change the system, in particular by giving individuals more power over it.  Further regulation will not drive down costs.

Ten GOP Health Ideas for Obama

Newt Gingrich and John Goodman strike!  Read on.

Health Care, Part 2

For all the information swirling around about the omnibus health care reform bill there has been one consistent pattern:  American’s are not overwhelmingly in favor of the measure.  Nor is a plurality in favor of the reform bill.  Here is a run down of what Rasmussen Reports discovered:

  • 55% of voters nationwide oppose the bill
  • For 5 straight weeks support for the health care reform bill has been between 38% and 41%
  • 60% of seniors are opposed to the bill
  • 19% strongly favor the bill while 45% strongly oppose
  • 53% believe the bill will lower the quality of care
  • 58% believe it will drive costs up
  • 66% believe an increase in free market competition will do more to lower costs than government intervention

Read more of this post

Hypocrisy – Jared

Barack Obama has taken office, retaken the oath he and Justice Roberts bungled, and already begun to go back on his promises.  Hypocrisy is a more fitting term for this particular instance.

Obama’s administration has already issued an executive order placing strict anti-lobbying rules for employees in his administration, including limiting gifts, how quickly one can move from public service to a lobbying firm, and moving from lobbying an official position.  Obama’s campaign of executive transparency has begun.

Or so we thought.  Two “exceptions” to this rule have already emerged.  Let us think of them as “privileged persons“.  These persons are William J. Lynn III, Obama’s pick to be number 2 at the Pentagon and until a few days ago a registered Pentagon lobbyist, and William Corr, tapped to be number 2 and the Department of Health and Human Services was an anti-tobacco lobbyist for the same department.  The response from the Obama Administration:  “Our waiver provisions are designed to allow uniquely qualified individuals like Bill Corr and Bill Lynn to serve the public interest in these critical times.”

But on Wednesday Obama said this:  “If you are a lobbyist entering my administration, you will not be able to work on matters you lobbied on, or in the agencies you lobbied, during the previous two years.” So much for a break from “business as usual”.

This is a very disappointing beginning for a much heralded and highly anticipated administration.  It seems that business as usual in Washington may also include hypocrisy.  Transparency and openness for the Obama administration may simply require you to know he lied to you, not for him to actually keep his word.  I don’t particularly appreciate being lied to.

American Education – Jared

Can She Save Our Schools? by Amanda Ripley, Time Magazine.

Finally, someone with a set taking on the American education system somewhere and not getting shot down (yet) for it.  She has potential, that is for sure.  We need more people like this as Superintendents of our public schools.  

Having attending public and private schools, along with being homeschooled, I have seen a vast gulf that exists between the students of all three.  There really is no reason for our students to be failing so badly and some serious change is needed.  It also has to happen in a decentralized manner like this does I think.  It will be more effective and better designed.  

Each school and each school district is different and it is necessary for each to be managed in such a way.  If Michelle Rhee’s ideas come to fruition and their potential promise comes to life, we will see a drastic change in much of the nation’s schools.  And it is needed, or the public education system will be lost forever.