Sunday, September 29, 2013

The Cleveland Clinic Prepares for ACA by Cutting Staff and Slashing Budget. No way! Way!

“The world-renowned Cleveland Clinic said on Wednesday it would cut jobs and slash five to six percent of its $6 billion annual budget to prepare for President Barack Obama's health reforms.

The clinic, which has treated celebrities and world leaders such as musician Lou Reed, former Italian Prime Minister Silvio Berlusconi and former Olympic gold medal skater Scott Hamilton, did not say how many of its 44,000 employees would be laid off. But a spokeswoman said that $330 million would be cut from its annual budget.

"Some of the initiatives include offering early retirement to 3,000 eligible employees, reducing operational costs, stricter review of filling vacant positions, and lastly workforce reductions," said Eileen Sheil, Executive Director of Corporate Communications for the Cleveland Clinic Foundation.

The clinic is Cleveland's largest employer and the second largest in Ohio after Wal-Mart. It is the largest provider in Ohio of Medicaid health coverage for the poor, the program that will expand to cover uninsured Americans under Obamacare.

"We know we are going to be reimbursed less," under Medicaid, Sheil said.” - Cleveland Clinic announces job cuts to prepare for Obamacare, Reuters, 09/18/2013.

Link to the entire article appears below:

Thursday, September 26, 2013

Dean Baker Weighs in on Obamacare: Baker’s Rent Seekers are the Good, All Other Rent Seekers are the Bad

Rent seeking proposition #1

“In just one week the main part of Obamacare will begin to kick in. This is the state level exchanges that will allow the uninsured to be covered. Beginning on October 1, people will be able to sign up to get insurance in their state regardless of their health.

Most people signing up on the exchanges will qualify for subsidies based on their income and family size. This means that the cost of insurance will be less than the advertised price.”

“Many of these people will now find insurance to be affordable with the subsidies on the exchanges even if they do not work. Some critics of Obamacare have argued that it will undermine incentives to work. In the case of older workers in poor health they are right, and this will be good.”

Rent seeking proposition #2

“The drug companies and medical equipment suppliers both end up as winners under Obamacare. They will be able to secure even greater profits from their government-provided patent monopolies since the ACA does little to rein in costs.

As a result, we will still be paying close to twice as much for drugs and medical devices as people in other wealthy countries. This is a guaranteed recipe for bad health care since the enormous profits provided by these patent monopolies give drug companies an incentive to push their drugs even when they may be harmful.

And we will still be paying twice as much for our doctors as people in other wealthy countries. These failures on cost controls will add hundreds of billions of dollars to the cost of health care each year.” - Obamacare: It's Better Than You Think, Dean Baker, Huffington Post, 09/23/2013

Link to the entire article appears below:

Monday, September 23, 2013

ACA: Where Choice is Job 57!

“Federal officials often say health insurance will cost consumers less than expected under President Obama’s health care law. But they rarely mention one big reason: many insurers are significantly limiting the choices of doctors and hospitals available to consumers.

From California to Illinois to New Hampshire, and in many states in between, insurers are driving down premiums by restricting the number of providers who will treat patients in their new health plans.

When insurance marketplaces open on Oct. 1, most of those shopping for coverage will be low- and moderate-income people for whom price is paramount. To hold down costs, insurers say, they have created smaller networks of doctors and hospitals than are typically found in commercial insurance. And those providers will, in many cases, be paid less than what they have been receiving from commercial insurers.

Some consumer advocates and health care providers are concerned. Decades of experience with Medicaid, the program for low-income people, show that having an insurance card does not guarantee access to specialists or other providers.” - Lower Premiums to Come at Cost of Fewer Choices, New York Times, 09/23/2013

Link to entire article appears below:

Sunday, September 22, 2013

ACA: what about the proposition that if too few people enroll ACA collapses?

“This week, the White House will kick off a six-month campaign to urge millions of uninsured Americans to sign up for health coverage as part of insurance marketplaces that open Oct. 1. If too few people enroll, the centerpiece of the Affordable Care Act could collapse.” - Battle Reignites Over Health Law as Rollout Nears, NYT, 09/22/2013

In a nutshell, the basis for insurance, in relation to pure risk, is that of: homogenous exposure units spread over a wide geographic area. Yes, you need to have a large enough number of homogenous exposure units in order that the law of large numbers is operative i.e. spreading risk over a large number of homogenous exposure units. The insurer also needs to be able to predict dollar amount of losses from the homogenous exposure units so premiums and investments will equal or exceed losses hence the insurer continuing as a solvent going concern. (1)

One item to consider is the underwriting [selection] of the homogenous exposure units in relation to price. For example, although vehicles are, in general, homogenous and vehicle operators are, in general, homogeneous, vehicles and operators tend to exhibit differences.

Hence the homogenous group has sub-attributes, that might be insurable, other sub-attributes may not be insurable or sub-attributes insurable at differing prices. 

An example might help. If the selection criteria in auto insurance is zero losses or violations in the last five years [0/0/5 underwriting] then price P is the outcome. If selection criteria in auto insurance is not more than one loss and not more than one violation in the last five years [1/1/5 underwriting] then the price is P+1. That is, the expected losses of the two otherwise homogeneous groups, exhibiting differing risk selection/attributes, differ, and hence price differs in relation to expected losses.

Therefore, selection (underwriting) is a determinant of price, as is, selection being associated with the law of large numbers, predictable dollars losses and premium level to equal or exceed loss.

One of the base arguments put forth by proponents of ACA/Obamacare is that “pooling risk”, a reference to the law of large numbers, solves all price problems. That selection becomes unimportant and hence premium is equal to or exceeds claims merely due to large numbers.

For a moment assume insurance has only one basis and that is “pooling risk”, as is the debate point put forth by proponents of ACA/Obamacare.

Does one have an example, a real life result, that one can point to regarding testing the proposition that “pooling risk” is the overriding criteria? The answer is yes. How so?

One needs only examine the results of the Pre-Existing Condition Insurance Plan as specified by ACA. The “pooling risk” or large numbers were predicted to be 375,000 signing up for the plan. However, only 135,000 signed up and the plan collapsed under its own weight circa 03/2013.

The $5 billion subsidy allocated to the Pre-Existing Condition Insurance Plan, plus the premium charged to participants, would not cover losses. If the 375,000 had signed up, the plan would have merely collapsed sooner.

It should be noted, that the premium charged, to applicants within the Pre-Existing Condition Insurance Plan, was predetermined. How so? The premium was based on selection based/underwriting based premiums, for a healthy applicant. (2)

Further, come 01/01/2014 the group of insured's within the Pre-Existing Condition Insurance Plan will move to ACA/Obamacare.

Link to the entire NYT article appears below:



(1) The Economic Theory of Insurance, Karl Borch

(2) Funds run low for health insurance in state ‘high-risk pools’, Washington Post








Tuesday, September 17, 2013

Art for Art’s Sake? ACA for ACA’s Sake? ACA Marches On: Creative Class Loses Coverage

“Nancy Pelosi waxed rhapsodic in 2010 as she imagined the benefits of Obamacare: “Think of an economy where people could be an artist or a photographer or a writer without worrying about keeping their day job in order to have health insurance.”

Well, that was the economy we used to have. But as Obamacare begins to kick in, artists, photographers, writers, and other members of the “creative class” who have access to health insurance programs through numerous professional organizations will lose that coverage.

Up until now professional organizations have worked with insurance providers to craft reduced-rate plans for their members. But thanks to the fine print in the Patient Protection and Affordable Care Act (PPACA), on January 1, 2014, many of these plans will fail to pass legal muster.

The College Art Association website posted a notice this month: “The New York Life Insurance Company recently informed CAA that it will no longer offer catastrophic healthcare coverage previously available to CAA members.” Why? Because it “is no longer an option” for “associations whose members reside in different states” to provide such coverage. These members will have to seek help from their home states’ newly formed Obamacare exchanges. Plans offered to Modern Language Association (MLA) members will suffer a similar fate.

Other insurance providers are reporting cancellations. The Entertainment Industry Group Insurance Trust (TEIGIT) website posts the following notice: “All individual and/or Sole Proprietor Health Insurance will terminate January 1, 2014. This includes plans acquired as Members of our Affiliated Associations & their groups.” Those affiliated associations include the American Federation of Television and Radio Artists, the Dramatists Guild, the Graphic Arts Guild, NY Women in Film and Television, and many others.” - Creative Destruction, Obamacare versus artists, writers, musicians, actors, et al., 09/09/2013, The Weekly Standard

Link to the entire article appears below:





Thursday, September 12, 2013

ACA Strikes Again: Trading-it-in at Trader Joe’s

“After extending health care coverage to many of its part-time employees for years, Trader Joe's has told workers who log fewer than 30 hours a week that they will need to find insurance on the Obamacare exchanges next year, according to a confidential memo from the grocer's chief executive.

In the memo to staff dated Aug. 30, Trader Joe's CEO Dan Bane said the company will cut part-timers a check for $500 in January and help guide them toward finding a new plan under the Affordable Care Act. The company will continue to offer health coverage to workers who carry 30 hours or more on average.

The law mandates that companies with 50 employees or more offer coverage to such full-time employees, though the Obama administration has chosen to delay that rule for a year.

Trader Joe's has won kudos for offering its health care, dental and vision plans to part-time workers at a reasonable price -- a rarity in an industry known for low pay and scant benefits. But with low-wage workers eligible for tax subsidies to buy health insurance next year, the company has apparently calculated that offering medical coverage to part-timers who work 18 hours or more is no longer worth the cost.

"Depending on income you may earn outside of Trader Joe's" -- i.e., another job -- "we believe that with the $500 from Trader Joe's and the tax credits available under the ACA, many of you should be able to obtain health care coverage at very little if any net cost to you," Bane wrote in the memo.” - Trader Joe's To Drop Health Coverage For Part-Time Workers Under Obamacare: Memo, Huffington Post, 09/12/2013

Observation: For several years and most notably in the last several months the Obama Administration has assured time and again that ACA will not cause employers to dump their health plans and direct their employees to the health insurance exchanges. Possibly the Obama Administration should take some advice from Winston Churchill: “However beautiful the strategy, you should occasionally look at the results”.

The results are that employers through a variety of methods are in fact dumping health insurance coverage or limiting any expansion of health insurance coverage. Methods such as wholesale dumping of health plans, to limiting current and future hires to twenty nine hours and hence part-time status and exempt from ACA rules, a combination of both or more limited action of excluding spouses where the spouse is employed and qualifies through his/her own employer, among other stratagem.  

Moreover, the employer that rationally deploys methods to deflect massive price increases associated with providing ACA central planner designed health insurance plans, directs employees to the health insurance exchanges where the exchange in effect uses other people’s money to subsidize coverage price as well as deductibles and co-insurance e.g. “we believe that with the $500 from Trader Joe's and the tax credits available under the ACA, many of you should be able to obtain health care coverage at very little if any net cost to you," Bane wrote in the memo.” There are no tax credits, there are merely taxpayer subsidies. Who pays? You pay.

We end with focused benefit and diffused costs [price]. That is, certain individuals pay little or nothing for health insurance while the many pay the price. Hence the moral melodrama of the politico i.e. millions without health insurance, is solved by the immoral act of coercively taking of others resources.

Link to the entire Huffington Post article appears below:

Update 09/15/2013: ObamaCare Employer Mandate: A List Of Cuts To Work Hours, Jobs, IBD 09/06/2013.



Monday, September 9, 2013

South Carolina vs. the ACA

Legislators in South Carolina are concerned about the impact of ACA upon Medicaid rolls and subsequent taxpayer money that will be required to fund such expansion of Medicaid rolls. However, the concern doesn’t fit a certain vision, one held by a particular author, hence spawning an article entitled: Insurance Rolls to Rise in State Fighting Plan.

Once past the verbal virtuosity argument, the author assumes the reader knows particular information most readers would not generally know and makes the following statement to support the article’s title:

"Even without a change in eligibility rules, enrollment is expected to grow as a result of the new health care law. The law requires most Americans to have coverage, and officials predict the mandate will prompt more of those who are eligible, but not enrolled, to sign up for Medicaid. " - Insurance Rolls to Rise in State Fighting Plan, New York Times, 09/07/2013 [link appears below]

Maybe filling in the blanks that the author left out is a worthy exercise regarding South Carolina and its concern. People that are eligible for current Medicaid under current rules, where the Federal government pays 57% and the states pay 43%, of those people eligible, it is estimated nationally only 61.9% have ever applied. That is, a pool of 30% exists that could sign up under current, un-expanded Medicaid, which is known as the "woodwork effect". That is, the mandate and penalty [or tax if you prefer] of ACA will cause the 30% to pour out of the woodwork to sign up for existing Medicaid to avoid the penalty/tax.

Problem is, the state is only reimbursed 57% regarding existing Medicaid hence the woodwork effect will bust existing state Medicaid budgets which are already a major budget item (and problem) of most states.

The author, politically/purposely, does not bother to connect the dots between Medicaid expansion under ACA and existing Medicaid. How so? The argument for expanding Medicaid, was not so much an argument as it was an edict. The expansion of Medicaid was forced down states throats with the threat of pulling the existing 57% reimbursement if they did not expand Medicaid per ACA. However such requirement and threat was overturned by the Supreme Court.

South Carolina’s concern, which is a concern shared by many, many states, is as follows:

(1) the woodwork effect will flood state Medicaid rolls hence busting state Medicaid budgets,

(2) the edict of expansion, as once required, albeit reimbursed at 100%, was only reimbursed at 100% until 2020 at which time the percentage would be reassessed,

(3) hence states with Medicaid budgets that are growing by leaps and bounds before ACA did not want the woodwork effect and future reimbursement percentages, which may end up set much lower, to expand their particular Medicaid budgets to the point that they had a duel budget crisis on their hands (beyond the current state Medicaid budget problems).

However, for a moment assume the Supreme Court found the opposite way, and the woodwork effect and the expansion took effect. Then approximately 16 million people, potentially, would have been dumped onto Medicaid rolls and millions more through the woodwork effect. Exactly how many doctors currently accept the price fixing scheme of Medicaid? Exactly what quality of doctor accepts the price fixing scheme? The number of doctors accepting Medicaid is decreasing at an increasing rate.

Considering the above monumental increase in Medicaid recipients and fewer and generally reported, less qualified doctors accepting Medicaid price fixing schemes; exactly what does Wanda Widget receive when she is enrolled in Medicaid? It is the classic: "I have insurance but can't find anyplace that accepts it".

Apparently Mr. Obama and his ilk "hope" things will work out. Yes
, hope springs eternal.

Laqueur: (laughing) Hope springs eternal. It's one of the most frequently quoted verses of English poetry. The poet was Alexander Pope, a decidedly cautious man. He had many enemies, and we know from his sister that he never went out into the street without his large, aggressive dog, and always with two loaded pistols in his bag.

Wednesday, September 4, 2013

All Hands Off Deck: 40,000 Strong Longshoremen’s Union Leaves AFL-CIO. Why? Obamacare

"In what is being reported as a surprise move, the 40,000 members of the International Longshore and Warehouse Union (ILWU) announced that they have formally ended their association with the AFL-CIO, one of the nation's largest private sector unions. The Longshoremen citied Obamacare and immigration reform as two important causes of their disaffiliation.

In an August 29 letter to AFL-CIO President Richard Trumka, ILWU President Robert McEllrath cited quite a list of grievances as reasons for the dissolution of their affiliation, but prominent among them was the AFL-CIO's support of Obamacare." - Citing Obamacare, 40,000 Longshoremen Quit the AFL-CIO,, 09/02/2013

Link to the entire article appears below:

Sunday, September 1, 2013

ACA Exchanges: We Market But You Advertise, huh?

“FALCON HEIGHTS, Minn.—At the Minnesota State Fair, state employees are promoting a health-insurance marketplace called MNsure by handing out fans imprinted with pictures of Paul Bunyan and Babe the Blue Ox.

The legendary lumberjack and his sidekick are just part of a pitch—including a humorous reference to the state as the "land of 10,000 reasons to get health insurance"—that seeks to sidestep references to "Obamacare" or the long-raging national debate over the Affordable Care Act and instead promote the marketplace as a home-grown creation.

Minnesota, along with thirteen other states and Washington, D.C. that are fully running their own health-insurance marketplaces, is marketing this way because it believes it will draw customers, even if it doesn't change popular impressions of Obamacare, the health overhaul designed to provide coverage to those who don't have it from their employer or elsewhere.

"We have to grab people's attention," said April Todd-Malmlov, MNsure's executive director. She said she told the ad agency designing the marketplace's ads to come up with something "out of the ordinary" and humorous.

The result is a $9 million marketing and outreach campaign including billboards and television ads that are set to run statewide starting next week. They show Paul Bunyan involved in Minnesota-style activities—clearing snow off a roof or water-skiing on a lake—and getting into accidents that would lead to expensive health care.

With enrollment set to begin Oct. 1 for plans that take effect in January, marketing by the 14 states is kicking into higher gear. Vermont said Thursday that it would introduce television and radio ads next week touting the local exchange, Vermont Health Connect, as being "For Vermonters, By Vermonters." In Oregon, television and radio ads feature local musicians singing songs including "Long Live Oregonians" to sell the state's Cover Oregon website.” - Obamacare, but by Any Other Name,, 08/30/2013

Observation: One of the argument points regarding private insurers in regards to the need for ACA was: that private insurers spend advertising money to attract customers [dissemination of information] and that money should be redirected to either lower prices for insurance and/or more essential first dollar benefits.

Consequentially, those advocating ACA created central planning rules which set a percentage of insurer revenue that must be spent on benefits or else a refund must come to consumers. That is, advertising expenditure of the insurer have been limited within the total central planner’s percentage rule.

Meanwhile back at the state as well as federal exchanges, advertising, with funny little ad lines and characters, seem oddly familiar, huh? The fact that such expenditure is not directed to health insurance price or more essential first dollar benefits is perfectly fine, if it is done by advocates of exchanges.

Same advertising dollar argument holds, yet two different argument outcomes. Funny how that works.

Link to the entire article, Obamacare, but by Any Other Name, appears in the link below: