Entries Tagged as 'insurance'

Rep. Campbell’s Terrible, Horrible, No Good, Very Bad Bill

October 7th, 2011 at 12:47 pm 7 Comments

Rep. John Capbell, a California Republican, has introduced what may well be the worst Republican-led bill of the current session. His proposal, H.R. 3125 (there’s no short title) is a pre-funded bailout for California’s state-run, currently privately funded California Earthquake Authority (CEA). It’s difficult to overstate how bad an idea this bill is and how much damage it could do to the country. Indeed, it would put taxpayers around the country on the hook for billions of dollars in losses to private homes that they don’t currently have to pay.

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More Businesses Opting Out of Obamacare

May 18th, 2011 at 11:06 am 33 Comments

Last week, pills the Obama administration approved over 200 new waivers for the Democrats’ health reform bill, more proof that businesses realize the plan is fundamentally flawed.

To say that Obamacare is fundamentally flawed is like saying Donald Trump would probably not be welcome at the Harvard Faculty Club (then again if he gave them an endowed chair, they might make him a lifetime member).

That companies and unions need to  request waivers of the requirements for a $750,000 level of coverage and comprehensive services including vision, dental, and other services when they currently provide much lower levels of health insurance for their employees illuminates the central problem with the law. To paraphrase Jimmy McMillan: the cost is too damn high.

Most small companies can’t afford to provide comprehensive fee for service, unmanaged health insurance to their employees. If business can’t provide it now, the unaffordability of comprehensive insurance will be transferred to the taxpayers. Subsidies will be provided to the new insurance exchanges and we’ll have to borrow trillions of dollars more in the coming years to pay for it.

If Obamacare succeeds in its essential goal of providing comprehensive health insurance to another 30 million people, companies will be foolish not to put their employees into the newly created plans. Certainly all the companies and organizations that have requested waivers will be doing exactly that. They can’t afford comprehensive insurance now and won’t be able to afford it in 2014.

The political debate over Medicare’s future is focused on the cost of care yet the Obama administration has been silent about controlling costs for the currently uninsured under-65 cohort. The whole focus of Obamacare is on finding money to insure that group and not on controlling the costs of the care they will receive.  These costs are another burden soon to be shouldered by a nation deep in debt.

Climate Change Policy Won’t Prevent Twister Deaths

May 13th, 2011 at 9:57 am 17 Comments

By any reasonable measure, the windstorms that ravaged the South in April present a massive tragedy: the most disaster-caused deaths in a single day since 9/11 and more deadly than all but three post-World War II natural disasters. Communities will mourn, ponder what-ifs, and rebuild. Federal, state, and local authorities as well as dozens of community organizations will do everything they can to help those now left without homes, neighbors, and loved ones. And many of those involved in the public policy debate over global climate change will use the storms to push for agendas that they support anyway.  In particular, groups that favor controls on carbon emissions will point to research showing that such emissions could produce the conditions that cause tornadoes; groups that oppose restrictions will point out that strong tornadoes have become less frequent in recent decades by some measures. And the debate will rage on. For all of the argument, there’s a good case that climate change and its politics should have nothing to do with the way America responds to tornado activity.

Here are the facts: the United States’ overall response to tornadoes through stronger building standards, better technology, and improved insurance practices has made the nation much safer. Even with the recent deaths taken into account, total death rates from tornadoes have dropped every decade since accurate statistics are available in the early 20th century and have fallen at least 80 percent in all: more than as many as a thousand died from tornadoes in a typical year in the early 20th century while few years in the 00s saw more than 100 deaths. If America wants to make sure the tragedy doesn’t repeat itself, continuing efforts to improve building, technology and insurance—not an emphasis on climate change—will save the most lives.

Building standards around the country have made most buildings in tornado-prone areas much safer over the past century. Tying roofs to house frames so they won’t blow away, required in many wind-storm prone areas, means that even people who fail to take shelter in basements will usually remain safe when storms roll through. Siding secured directly to home frames rather than simply nailed on also helps. But these efforts aren’t as widespread as they should be; most houses predate standards that require them. Buildings all across the country need reinforcement.

While strengthening building standards simply represents commonsense, developing better technology has saved even more lives. Some developments like Doppler weather radars that convey information about the velocity of funnel clouds have obvious direct applications to tornado forecasting. But even bigger declines in tornado deaths have happened as a result of broadly useful technologies like radio broadcasts that allow for advance warning and automatic gas line shutoffs that prevent storm-caused fires.   But there is more to do. For example, although smartphone technology makes it possible to send most people severe weather alerts for their exact locations (current tornado warnings cover huge areas so many ignore them), there’s no system that actually does so.

Lastly, insurance, although less directly, has also saved many lives. Over the past several decades, most states have moved towards “open competition” systems for setting insurance rates that let market forces rather than government agencies determine what people pay for insurance. These prices convey information about safety because people who live in dangerous places pay more. But this trend, like the others, could still go farther. Although the sheer number of factors involved with tornado damage makes it nearly impossible to draw firm conclusions, it’s interesting to note that the states with the most damage—North Carolina, Alabama, and Mississippi—have not historically allowed for much choice for flexibility in their insurance markets.

In short, we have good evidence for what works. The climate change debate matters quite a lot in many areas of public policy. But the evidence about what has worked to deal with tornadoes indicates that public policy should focus on things other than climate change if we want to make America safer against severe windstorms.

Quake Bill Means Big Debt After the Big One

May 11th, 2011 at 2:38 pm 2 Comments

One of the consequences of the recent Japanese earthquake is that legislation that might not be a good idea seems significantly more appealing. This seems to be the case with new legislation being proposed by Senators Barbara Boxer and Dianne Feinstein to subsidize the purchase of earthquake insurance in California.

California is a very earthquake-prone state and all its residents are aware of this. Yet currently only 12% of Californians have earthquake insurance. Benjamin Barendrick, mind a Farmers Insurance Agent based in San Francisco told FrumForum that in the current economy, most Californians simply can’t afford to purchase earthquake insurance:

The economy is so bad it is hard to qualify for a home and have money to pay for insurance. If you have a home that’s valued at a million dollars, you are talking about two million in earthquake insurance with a 15 percent deductible.

Boxer and Feinstein’s solution is a bill that would lower the cost of insurance in California by letting the California Earthquake Authority (CEA) (a private-public partnership for earthquake insurance in the state) receive federal loan guarantees.

The bill’s supporters claim it will lower costs and make it easier to purchase insurance. This is indeed an accurate assessment of what will happen when you subsidize the cost of insurance. Critics however contend that insurance will be unsustainable once an earthquake actually hits the state.

Brad Kading, the head of the Association of Bermuda Insurers and Reinsurers told FrumForum that the bill would distort the market, creating liabilities that the CEA could not hope to be able to pay back in the event of an earthquake.

According to Kading, limited resources should be spent on mitigation efforts: “limited government resources should be used to prevent damage in the first place. With building codes for example, or incentives to reduce the risk of loss.” Kading cited a 1990s era pilot project between the City of Oakland and FEMA where government funds were used to help retrofit homes to be more prepared for earthquakes as a positive example of this. Investments such as this makes homes more protected against earthquakes which helps bring down costs of insurance over the long run.

Large federal guarantees of the sort being proposed by Boxer and Feinstein are, unfortunately, not unprecedented. A similar guarantee by the federal government for flood insurance has left that program $18 billion in debt it is hard to see how a similar fate could not also come to the CEA if it were to receive a similar guarantee. The inevitable choices that California will face if this bill passes and an earthquake hits will either be to raise yet more taxes in an already high-tax state, or to receive a federal bailout.

Follow Noah on Twitter: @noahkgreen

Obama’s Mandate Waiver Trick

March 1st, 2011 at 12:23 pm 23 Comments

On Monday, ed President Obama announced to the National Governors Association that he would endorse a waiver for states to create their own health plans.  States would be eligible for the waiver to cover their residents as long as they can create “the quality healthcare their citizens deserve.” But the waiver plan won’t make things easier for the states.  In fact, Obama’s move is a political masterstroke and once again he’s shown his ability to outmaneuver his critics.

Obamacare is an insurance coverage plan, not a reform of American healthcare. As Paul Starr, the Stuart Professor of Communications and Public Affairs at Princeton and winner of the Pulitzer Prize for his classic work, The Social Transformation of American Medicine, states:  “Ultimately, the expansion of coverage will not survive unless the growth in costs is reduced.” The failure to have a plan that controls costs dooms any insurance plan to fail and the waiver the president offered to the states cannot succeed unless the ability to control costs and limit the rich benefits and open enrollment requirements is also granted.

President Obama’s offer to allow states to craft their own insurance plan will lead nowhere if the waivers require the states to maintain all of the benefits Obamacare currently requires. The reason for requiring an individual mandate is that Obamacare entails a very expensive form of insurance and requires insurers to accept patients whenever they apply for healthcare insurance even if the patients wait until they first need the coverage to make their applications.  The economics of Obamacare cannot possibly work without a mandate that includes virtually every American. But this mandate is abhorrent to many voters. States cannot possibly implement their own versions of Obamacare unless the waivers relieve them not only of the individual mandate but also of many of the required care provisions of the plan.

If the states accept Obama’s proposal to grant waivers of the individual mandate while maintaining the onerous requirements of Obamacare, the president will have outmaneuvered his opponents. He can then watch their efforts at implementing insurance reform crash and burn.  Obama will have forced the states into a Hobson’s choice: accept Obamacare and fail to control costs or go on your own and fail even sooner without federal support. Either way, the burden of healthcare costs will continue to overwhelm state and federal budgets.

Dems Get Obamacare Back on Track

October 13th, 2009 at 3:01 pm 14 Comments

In September, sick they seemed hopeless – internally divided, diagnosis unfocused in their message, find and unable to clear the Senate Finance Committee.  The President’s promise of health-reform legislation by year’s end seemed like an exercise in wishful thinking.

What a difference a month makes.  The Democrats are on fire.  The squabbling about the public option has quieted down.  With a hand from the CBO, they now have a clear message of expanded coverage without larger deficits.  And, yes, today Senator Baucus pushed his draft legislation though the Senate Finance Committee – and did it with a Republican vote.

Much work remains to be done and problems remain for the Democrats.  Polling suggests that Americans are against new taxes to finance new healthcare programs – and taxes will rise with their proposals.  The insurance industry is pushing back hard.  It’s even possible, though quite unlikely, that Senator Snowe will drop her support (her endorsement this afternoon was hardly robust).

Make no mistake, however: Democrats took a major step forward today.  And the path ahead is obvious: a Senate compromise that largely favors the Baucus bill over the HELP Committee draft, with the House then passing this with few (if any) amendments.

Health-reform legislation by year’s end.  Maybe earlier.

The true cost?  The practicality of the Medicare cost cutting?  The impact of the tax hikes? These questions will almost surely remain unanswered.

The Democrats have been skillful in their politics.  America will soon find out if good politics makes for good policies.

Giving Moderation a Bad Name

David Frum September 17th, 2009 at 11:06 am 18 Comments

Liberal Democrats have an answer to the problem of rising health costs. They want government gradually to take over the health insurance market, and then use its monopsony power to force prices down.

Conservative Republicans have answers too. We want to intensify competition by putting individuals not employers in charge of health decision-making and allowing health policies to be sold across state lines.

The so-called moderate Baucus plan announced yesterday offers no such answers. It imposes an individual mandate, extends federal subsidies, and imposes a tax on employers to generate some expansion of coverage. But as to cost control, it proposes virtually nothing.

Baucus takes pride in his plan’s deficit neutrality: It raises revenues in tandem with its higher costs. While minimizing costs to the Treasury is a valid concern, there ought to be at least equal attention to the costs to the economy – to employers and to workers. This issue, of so vital concern to both liberals and conservatives, was entirely dropped by the Baucus moderates.

Why is the Club for Growth Attacking Senator Bennett?

David Frum August 31st, 2009 at 11:30 pm 77 Comments

The Club for Growth has released a new ad attacking Utah Sen. Robert Bennett’s sponsorship of the Healthy Americans Act. View it here.

Among the complaints the club lodges against Bennett’s plan: “job-killing tax increases on employers.” They’re referring of course to the Act’s termination of the present exclusion of health benefits from income tax.

But notice something: These same “job-killing tax increases on employers” are also imposed by the Republican alternative to the president’s health plans, ambulance the Coburn-Ryan bill.

The ad warns that Sen. Bennett is offering a plan that “pushes you out of your current plan.” Coburn-Ryan would have exactly the same effect and for the same reason – as the tax exclusion ended, employers would tend to drop health coverage and individuals would shift to buying it for themselves.

Both Coburn-Ryan and the Healthy Americans Act would substitute new tax advantages for the old exclusion: Coburn-Ryan would offer a refundable tax credit of more than $5700, Healthy Americans a tax deduction up to $19,000 plus direct subsidies to families earning up to 400% of the poverty level.

Like Bennett-Wyden, Coburn-Ryan would impose significant new regulations on health insurers, to put an end to some of their most complained-of practices.

So why is one bill Republican orthodoxy while the other is beyond the pale?

Here are three important differences between Coburn-Ryan and Bennett-Wyden.

1) While both plans would overthrow the existing system of health insurance, only Bennett-Wyden takes action to ensure that a new system is ready and waiting to fill the void. Bennett-Wyden would require individuals to buy health insurance, would organize state buying pools to ensure that this insurance is affordable, and would regulate insurance to ensure that coverage is adequate. Coburn-Ryan would trust to the market to provide. That’s normally a good impulse. The trouble is that today’s healthcare market has been so twisted and distorted by state governments that it does not in fact provide – and Coburn-Ryan offers precious few remedies to correct these state-imposed malfunctions.

2) While both plans offer government aid to replace the former tax exemption, Bennett-Wyden’s math adds up and Coburn-Ryan’s does not. A health insurance policy for a typical family costs north of $13,000 and rising. Under Coburn-Ryan, families would pay more in income tax – and recoup not even half the cost of a typical plan. Bennett-Wyden costs more, but that is because it is adequate to the job it sets itself.

3) Bennett-Wyden has won Democratic support and cosponsorship. It could conceivably become law. Coburn-Ryan cannot.

If your priority is to preserve a competitive private-sector health insurance system in the United States, while extending coverage and restraining costs, Bennett-Wyden is thus far literally the only game in town. That does not mean everybody must favor it, or approve all its details. Only that when a group like the Club for Growth dive-bombs Bennett-Wyden, and denounces Sen. Bennett, for helping to draft it, it opens the question: Do you guys have any solutions to offer at all to the practical problems facing Americans?

The Headlines Review

August 30th, 2009 at 8:10 pm Comments Off

Napoleon Linardatos presents a humorous take on today’s headlines.

“As Internet Booms, the Postal Service Fights Back”

-New York Times, 08.28.09

The U.S. Postal Service plans to start its own email service. The users of the service will be able to send and receive emails every day except Sunday.

* * *

“Bernanke Victimized by Identity Fraud Ring”

-Newsweek, 08.25.09

The Federal Reserve Chairman, Ben Bernanke, became suspicious when his attempted online purchase of Suze Orman’s The Laws of Money was declined.

* * *

“Colorado wildlife experts get aggressive going after smart bears”

-Denver Post, 8.24.09

Bears found in Mensa meetings will be shot at once.

* * *

“GOP Offers Seniors Health Bill of Rights”

-Associated Press, 8.24.09

Article I. Congress shall make no law reducing the massive intergenerational wealth transfers instituted by our political opponents in the years past.

* * *

“Yahoo renews vow to fight Microsoft”

-Financial Times, 8.25.09

Yahoo’s CEO said “We shall fight them on the closed circuits, we shall fight them on the e-commerce platforms, we shall fight them on the copper and fiber lines, we shall never merge.”

* * *

“Anne Fine deplores ‘gritty realism’ of modern children’s books”

-The Times, 8.24.09

J. K. Rowling’s newest book Notes from the Hogwarts Underground will be out this fall.

* * *

“Iran puts leading reformers on trial over unrest”

-Reuters, 8.25.09

The dissidents are charged with disorderly contact and astroturfing.

* * *

“U.S. limits visas in Honduras, stepping up pressure”

-Reuters, 8.25.09

In an effort to improve its relationship with the Obama administration, Honduras plans to turn decidedly anti-American.

* * *

“Italy to Ask Libya for Help in Controlling Migration”

-Wall Street Journal, 8.28.09

If Libya refuses the offer, Italy plans to cut off the head of Gaddafi’s favorite camel and place it in the dictator’s bed.

* * *

“Robbers pretended to sell President Obama health insurance policies to invade Long Island home”

-New York Daily News, 8.29.09

The victims got wary when they were told that the first insurance premium payment would consist of the plasma TV, the kid’s iPod and the “really cute shepherdess lamp.”

Michael Pollan: I’ll Still Shop at Whole Foods

August 28th, 2009 at 5:00 pm 79 Comments

John Mackey’s views on health care, much as I disagree with them, will not prevent me from shopping at Whole Foods. I can understand why people would want to boycott, but it’s important to play out the hypothetical consequences of a successful boycott. Whole Foods is not perfect, however if they were to disappear, the cause of improving Americans’ health by building an alternative food system, based on more fresh food, pastured and humanely raised meats and sustainable agriculture, would suffer. I happen to believe health care reform has the potential to drive big changes in the food system, and to enlist the health care industry in the fight to reform agriculture. How? Because if health insurers can no longer pick and choose their clients, and throw sick people out, they will develop a much stronger interest in prevention, which is to say, in changing the way America feeds itself. When health insurers realize they will make thousands more in profits for every case of type II diabetes they can prevent, they will develop a strong interest in things like corn subsidies, local food systems, farmer’s markets, school lunch, public health campaigns about soda, etc. So Mackey is wrong on health care, but Whole Foods is often right about food, and their support for the farmers matters more to me than the political views of their founder. I haven’t examined the political views of all the retailers who feed me, but I can imagine having a lot of eating problems if I make them a litmus test.