Category Archives: Entitlements
John Stossel: Why Obamacare Will Be No More Successful Than Soviet Central Planning
Most Americans — even those who are legislators — know very little about the details of President Obama’s Affordable Care Act, so-called Obamacare. Next year, when it goes into effect, we will learn the hard way.
Many people lazily assume that the law will do roughly what it promises: give insurance to the uninsured and lower the cost of health care by limiting spending on dubious procedures.
Don’t count on it.
Consider just the complexity: The act itself is more than 906 pages long, and again and again in those 906 pages are the words, “the Secretary shall promulgate regulations …”
“Secretary” refers to Secretary of Health and Human Services Kathleen Sebelius. Her minions have been busy. They’ve already added 20,000 pages of rules. They form a stack 7 feet high, and more are to come.
Our old health care system was already a bureaucratic and regulatory nightmare. It had 16,000 different codes for different ailments. Under our new, “improved” system, there will be more than a 100,000.
Government likes to think regulations can account for every possibility. Injured at a chicken coop? The code for that will be Y9272. Fall at an art gallery? That means you are a Y92250. There are three different codes for walking into a lamppost — depending on how often you’ve walked into lampposts. This is supposed to give government a more precise way to reimburse doctors for treating people and alert us to surges in injuries that might inspire further regulation.
On Government-Planned World, this makes sense. But it will be no more successful than Soviet central planning.
Compare all that to a tiny part of American medicine that is still free-market: Lasik eye surgery.
Its quality has improved, while costs dropped 25 percent. Lasik (and cosmetic surgery) are specialties that provide a better consumer experience because they are a market. Patients pay directly, so doctors innovate constantly to please them. Lasik doctors even give patients their cellphone numbers.
President Obama didn’t kill American free-market health care. It began dying during World War II, when government imposed wage and price controls. At first, companies said, “Great, stability!” But then they realized that they could not attract better workers without raises. So companies got around the rules, as companies do. They gave “benefits,” like health insurance.
Government then distorted the market further by giving employer-based health insurance better tax treatment than coverage you buy yourself.
But employer-based insurance is nuts. Many workers feel locked into their jobs. Company insurance largely destroyed the health care free market, since employees rarely shop for the best service at the lowest price.
Now Obamacare may kill what’s left of that market.
Maybe we will soon be like Canada, where some people wait years for treatment. A producer from my TV show went to a Canadian town where the town clerk pulls names out of a box and then phones people to say: “Congratulations! You get to see a doctor this month!”
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Click below for the full article.
http://reason.com/archives/2013/05/01/why-obamacare-will-be-no-more-successful
What is the right fix to social security? Is there one?
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The above chart is taken from the article “Is Obama’s New Index the Right Fix for Social Security?” from the Wall Street Cheat Sheet’s website, which can be viewed below. It does start one to question just what has Social Security become and how should we fix it? (If it should be fixed).
Reason.com: California Considers Adopting a Homeless Bill of Rights
The Homeless Bill of Rights, the name applied to a new bill that recently soared through the California Assembly’s Judiciary Committee on a 7-2 vote, is the latest in a long line of California legislation that has grabbed national attention for its sheer lunacy. At the current rate, California’s “differently sheltered” will be the only residents left with any rights.
Its worst provisions have been stripped away and I doubt the governor will sign something that so thoroughly offends city officials, but the proposal does epitomize the mock-worthy nature of so much of the thinking that dominates this state’s government. Legislators in all states introduce crazy stuff to make a point. But in California, these strange bills can actually make it to the governor’s desk.
The homeless bill’s author, Assemblyman Tom Ammiano (D-San Francisco), deserves credit for at least identifying a real problem, which is an oddity in a Legislature that usually avoids reality. Homelessness is rampant in California, and the troubled people who wander our streets often have nowhere to go as they get chased from one location to the next.
Homelessness is a vexing problem, but the solution is not to make the homeless a protected class of citizen with a constitutional right to urinate on sidewalks and accumulate piles of vermin-infested clothing in city parks. Instead of giving the homeless a place to live, the state government wants to give them taxpayer-subsidized lawyers.
The bill features overstated civil-rights-oriented language. It notes that California has “a long history of discriminatory laws and ordinances that have disproportionately affected people with low incomes.” The language refers to Jim Crow laws and anti-Okie laws.
Cities here struggle – sometimes clumsily and unfairly – with throngs of people who camp out in city parks and sleep on sidewalks and in doorways. There is a legitimate public issue here.
When I worked in a downtown Sacramento office building, my colleagues and I joked about being in a scene from a zombie movie. As we walked down the street, homeless people would limp toward us, hands out, demanding money. One of my reporters was assaulted by one. In a well-publicized incident near my old office, a homeless woman shot a man in a wheelchair after he told her to get a job. It’s not always unreasonable to try to shoo them away.
The homeless – many of whom are mentally ill or have substance-abuse issues – need compassion and social services (preferably ones provided by non-profits, rather than by government bureaucracies more interested in creating big pensions for their employees). Instead they are used as pawns for a politician’s political posturing.
The most objectionable language has already been removed. Critics have mocked the now-deleted provision that guaranteed homeless people “the right to engage in life sustaining activities that must be carried out in public spaces.” That includes eating, congregating, collecting personal property, and urinating. I’ve known non-homeless people who have received a citation for peeing in public, but a homeless person would have been exempt had the original language remained intact.
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Click below for the full article.
http://reason.com/archives/2013/05/03/homeless-bill-of-rights-showcases-califo
Yahoo News: PROMISES, PROMISES: Social Security pledge at risk
The issue:
As the population gets older, Social Security, Medicare and Medicaid are eating up more and more of the federal budget, squeezing the ability of the government to pay for other programs. Today, the three massive benefit programs account for 44 percent of federal spending. Left unchanged, they will account for more than 60 percent in 25 years, according to the Congressional Budget Office.
Unless Congress acts, the trust fund that supports Social Security is projected to run out of money in 2033. At that point, the retirement and disability program would collect only enough in payroll taxes to pay about 75 percent of benefits.
Medicare’s hospital insurance fund is in worse shape. It is projected to run out of money in 2024. At that point, it would only be able to pay 87 percent of costs, according to projections by the trustees who oversee Medicare and Social Security.
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The campaign promise:
Obama rarely mentioned Social Security during his 2012 re-election campaign. Four years earlier, he was more forthcoming.
In a 2008 speech to AARP: “John McCain’s campaign has suggested that the best answer for the growing pressures on Social Security might be to cut cost-of-living adjustments or raise the retirement age. Let me be clear: I will not do either.”
On Medicare, Obama told the Democratic convention on Sept. 6, 2012: “Yes, we will reform and strengthen Medicare for the long haul, but we’ll do it by reducing the cost of health care, not by asking seniors to pay thousands of dollars more.”
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The prospects:
Obama has already offered to break part of his 2008 pledge on Social Security. Twice in negotiations with GOP leaders, he agreed to adopt a new measure of inflation that would result in smaller cost-of-living adjustments, or COLAs, for Social Security recipients. Both deals fell apart. But now Obama has put forward the idea in his own proposed federal budget. If adopted, it would gradually trim benefit increases in Social Security, Medicare and other programs while raising taxes.
His proposed changes, once phased in, would mean a cut in Social Security benefits of nearly $1,000 a year for an average 85-year-old, $560 for a 75-year-old and $136 for a 65-year-old.
Obama and Republican leaders in Congress have held off-and-on talks about possible changes to entitlement programs since 2011, as part of their efforts to reduce government borrowing. But a deal remains elusive. Republicans insist any agreement must include deep spending cuts, while Obama says any deal must include more tax revenue. And many Democrats in Congress are protective of the entitlement programs that Obama now is willing to touch.
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Click below for the full article.
http://news.yahoo.com/promises-promises-social-security-pledge-173052710.html
Forbes: GOP’s Dave Camp: Why Not Put All Federal Employees Onto Obamacare’s Exchanges?
In response to this week’s brouhaha regarding attempts by members of Congress to avoid having to enroll themselves and their staff members in Obamacare’s health insurance exchanges, Michigan Republican Dave Camp, Chairman of the House Ways and Means Committee, has offered a new proposal: Why not put all federal employees on the exchanges? It’s an attractive idea, but it has some downside: it would dismantle a popular model of market-based health reform.
“If the ObamaCare exchanges are good enough for the hardworking Americans and small businesses the law claims to help, then they should be good enough for the president, vice president, Congress, and federal employees,” said Camp’s spokeswoman in a statement.
The political principle is straightforward, but it would come at a price. Putting all federal employees on the exchanges would obliterate the most market-oriented insurance program run by the government, the Federal Employee Health Benefits Program, or FEHBP. Indeed, the FEHBP has long been considered a model for market-based reform of the Medicare and Medicaid programs.
In the FEHBP, employees get to choose amongst a wide variety of plans offered by private insurers. The employer–the government–then subsidizes about three-fourths of the cost to the employee. The employee can choose a more generous or expensive plan if he wants, but he has to pay for a portion of the difference in price, and vice versa. As a result of this approach, FEHBP plans have organically evolved to contain the benefits and financial features that consumers want. By contrast, any minor change to Medicare requires an act of Congress.
Obamacare’s exchanges are closer in concept to FEHBP than traditional Medicare, but the exchanges heavily constrain the ability of plans to alter their design as consumers’ preferences evolve.
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Click below for the full article.
US News: What Gen X Doesn’t Know About Social Security
Members of Generation X, those born between 1965 and 1976, are planning to collect Social Security at an average age of 65, according to a recent survey. But that could be a mistake. Gen Xers won’t qualify for the full Social Security payments they have earned until age 67. Those who sign up for Social Security at age 65 will get permanently lower payments for the rest of their lives.
The Social Security full retirement age at which you can claim the entire benefit you have earned is 67 for everyone born in 1960 or later. Gen Xers who sign up for Social Security at age 65, as 29 percent plan to do, will see their monthly payments reduced by about 13.3 percent.
A GfK Custom Research North America survey of 1,000 adults ages 36 to 47 commissioned by the MetLife Mature Market Institute found that 18 percent of Gen Xers plan to claim Social Security benefits as soon as they are eligible at age 62. But workers who sign up at this age will see their payments reduced by 30 percent. For example, a worker who would be eligible for $1,000 per month upon retirement at age 67 would get just $700 per month is he signs up for Social Security at age 62. Another 16 percent of people in their late 30s and early 40s simply don’t know when they will start receiving Social Security benefits.
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Click below for the full article.
Motley Fool: Do These Obamacare Winners Look Like Losers Now?
Have the Obamacare winners become losers? When the Patient Protection and Affordable Care Act, or PPACA, was first passed, most analysts pegged hospital systems as obvious winners from the new law. That viewpoint also held true last year as the Supreme Court upheld much of Obamacare.
The stock market clearly agreed. Immediately after the Supreme Court decision, hospital stocks surged. Community Health Systems (NYSE: CYH ) jumped 8%. Health Management Associates (NYSE: HMA ) shares rose 7%. The largest private hospital chain, HCA Holdings (NYSE: HCA ) , soared by 10%.
Since the high court ruling, few sectors have performed as well as hospitals have. Community Health Systems shares rose as much as 88% by late March. Likewise, HMA stock nearly doubled. HCA shares rose more than 50% during the same period. No hospital stock performed better than Tenet Healthcare (NYSE: THC ) , though. Tenet’s shares skyrocketed 140%.
That was then. The performance of these stocks in the month of April thus far tells a much different tale.
Spring backwards? Community Health Systems shares are down almost 13% since the beginning of April. HMA isn’t far behind, with shares falling 12%. HCA stock has dropped 7.5%. What about the biggest winner: Tenet? It’s now the biggest loser, with shares plunging more than 16% this month. Has the luster of Obamacare worn off?
Many hospitals wanted the ACA to succeed. The industry’s lobbying organization, the American Hospital Association, actively supported the legislation and even submitted an amicus brief to the Supreme Court in support of the individual mandate.
The primary reason behind support for the bill stemmed from the prospects of millions of currently uninsured Americans gaining insurance. Many hospitals must write off large amounts of money when individuals with no insurance cannot pay for the care provided. If more people gain insurance under Obamacare, hospitals hope that these write-offs will decrease significantly.
However, many currently uninsured Americans could choose to pay fines rather than obtain insurance. If this scenario becomes widespread, the benefits to hospitals could be dampened.
Others suspect that the costs of the ACA could minimize the advantages for hospitals. Bob Kirby, a director with Fitch Ratings, said last year that “it is unclear if the incremental revenue generated from increased utilization and lower levels of uncompensated care will offset the potential compression in margins.”
All in the timing Obamacare’s timing could also be problematic. Even if millions of uninsured Americans buy insurance as hoped for, that scenario won’t happen until 2014. In the meantime, hospitals are dealing with some of the challenges of the ACA.
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Click below for the full article.
Forbes: Congress Seeks to Opt Out of Participating in Obamacare’s Exchanges
As Obamacare was winding its way through the Senate in 2009, Sen. Chuck Grassley (R., Iowa) slipped in an amendment requiring that members of Congress, and their staff, enroll in Obamacare’s health insurance exchanges. The idea was simple: that if Congress was going to impose Obamacare upon the country, it should have to experience what it is imposing firsthand. But now, word comes that Congress is quietly seeking to rescind that provision of the law, because members fear that staffers who face higher insurance costs will leave the Hill. The news has sparked outrage from the right and left. Here’s the back story, and why this debate is crucial to the future of market-based health reform.
Sen. Grassley’s original idea was to require all federal employees to enroll in the exchanges, instead of in the Federal Employee Health Benefits Program, where most gain coverage today. Indeed, a previous Senate Finance Committee amendment proposed putting members and staffers on Medicaid. But “fierce opposition from federal employee unions” sank Grassley’s effort, and he had to water his amendment down to only apply to Congress and congressional staff.
Staffers grumble about being stuck on the exchanges
Ever since Obamacare became law, this has been a source of grumbling among the congressional staffers I talk to. One aspect of the Grassley amendment is that it originally appeared to exempt staffers who worked for congressional committees, and congressional leadership, because those staffers didn’t work for specific Members of Congress. (My understanding is that the Office of Personnel Management has since clarified the regulations to include all staff, including committee and leadership.)
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It is always fascinating when politicians pass unconstitutional laws that are supposedly good enough for the people but not good enough for them. Click below for the full article.
Associated Press: UnitedHealth warns of Medicare profit squeeze
UnitedHealth Group, the largest provider of Medicare Advantage plans, warned Thursday that funding cuts for the privately-run versions of the federal Medicare program will force it to reconsider its expectations for earnings growth next year.
CEO Stephen Hemsley told analysts that the government-subsidized coverage for elderly and disabled people faces a reimbursement cut of about 4 percent next year. That’s on top of other possible federal funding reductions and an expected 3 percent rise in medical costs.
“We did not expect the fastest-growing, most popular and most effective of the Medicare benefit options serving America’s seniors would be underfunded to this extent in 2014,” Hemsley said.
More than 13 million people were enrolled in Medicare Advantage plans last year, or about 27 percent of the Medicare population, according to the nonprofit Kaiser Family Foundation.
Insurers offer hundreds of different Medicare Advantage plans around the country. The coverage typically provides extras such as dental and vision care, or rates that are lower than standard Medicare.
UnitedHealth, which is the nation’s largest health insurer, has nearly 2.9 million people enrolled, and the plans brought in about 20 percent of the insurer’s revenue last year.
Shares of UnitedHealth and other insurers that provide Medicare Advantage coverage slid in February after the Centers for Medicare and Medicaid Services released data that pointed to payment cuts as steep as 8 percent next year. The government then softened the blow to a reduction of about 4 percent.
But UnitedHealth said that cut, combined with the other reductions, will be tough to stomach. UnitedHealth said it may have to trim benefits, change provider networks or leave some markets to preserve Medicare Advantage profitability.
Hemsley, UnitedHealth’s CEO, called the reimbursement cut “a significantly greater rate setback than anyone could have expected.”
The company also said widespread government spending cuts that started earlier this year and hit Medicare will make it hard for the insurer to reach the top end of its forecast for 2013 earnings of $5.25 to $5.50 per share. Analysts expect earnings of $5.51 per share, according to FactSet, a research firm.
Analysts had labeled UnitedHealth’s 2013 earnings forecast conservative after it came out last fall, and the insurer normally raises it several times through the year. But so far, the company has just backed the initial projection.
Thursday’s outlook warning came as UnitedHealth reported that its first-quarter earnings sank 14 percent, largely due to a lower gain the company recorded due to leftover insurance claims.
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Click below for the full article.
http://finance.yahoo.com/news/unitedhealth-warns-medicare-profit-squeeze-175814694–finance.html