Economics And Democracy II

            It was recently mentioned (Columbus On The Record 9-27-13) how the recent sales tax increase in Franklin County has met such public indifference. The same was said with regard to the state sales tax increase earlier this summer. A previous post pointed out the recent actuality of income distribution within the US; that 10 percent of the population account for 48 percent of the income, 90 percent for 52 percent of the income. That 90 percent in turn spends (consumes) most of its earnings. The economists’ critique is that this is not a “progressive” tax (based on wealth or actual dollars in hand), but a “regressive” tax (based on head count. If you dwell in the kingdom, you must pay the king’s tax collector). Whether regressive or progressive, according to Robert Reich, the tax is a rule or regulation that our democracy formulated in order to institute an economy. The outcome (or consequences) of that tax IS our economy. Formulate it differently (through the democratic process) and you arrive at a different economy. Currently, just such thinking dominates the national headlines with one group of our legislative representatives threatening to inflict damage on the entire country’s economy if the rules are not to their liking. Of course, changing those rules, according to Mr. Reich, is what makes for an economy. Indifference follows this entire scenario, much as it does central Ohio’s tax increases. One could speculate that we, as a people, have become so inured (desensitized) to the aesthetics and strategies of terrorism over the last 20 years that we simply have incorporated its approach into our everyday. Mr. Reich was upbeat about economics, knowing that in a democracy a difference could be made.  A 9-27-13 Wall Street Journal article materializes Reich’s economics approach while at the same time questioning our “democracy”. In The Hidden Biotech Provision in Budget Showdown, Alicia Mundy states: “Tucked into the House version of the bill that would have funded the government—in addition to the high-profile language designed to defund the health-care law—was an overlooked provision dubbed the Monsanto Protection Act by critics. Supported by the genetically modified food industry and Monsanto Co., the Farmer Assurance Provision would allow farmers to grow genetically modified crops even if a court had blocked their use. It was first passed into law as part of the 2012 Senate-House agreement that kept the government running that time around. More recently, it was inserted into the stop-gap funding bill that Republicans in the House passed Sept. 20.” Outcry has been made that although the various practices that brought the near total meltdown of the financial sector in 2008 were illegal at most, unethical at least, no upper level executives or managers have been prosecuted. In a famous 60 Minutes interview, the reasoning given by the head Federal Justice Department prosecutor was that it would have threatened the national economy. What Reich promotes seems to make the prosecutor’s rationale quite legitimate and necessary; pass laws (which were passed) that allow a practice while a court of law blocks that practice makes it incredibly difficult to know what is illegal, let alone enforce a rule, form an economy. At the end of her article, Alicia Mundy exposes why Reich may not have been so upbeat and positive had Bill Moyers asked him how he felt about democracy. Mundy writes: “The rider isn’t likely to resurface in any continuing resolution this year, said a Republican House aide. “The rider is toxic,” he said.  No one in the House wants to claim it as their own, he said.” A representative democracy legislating laws, rules and regulation authored by anonymous legislators produces the kind of economy we now find ourselves roiling in.

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Economics And Democracy

            Jamie Dimon’s Chase bank will be letting go over 400 workers in the Columbus area. Less than ten years ago the business was championed (and received public subsidies) for bringing jobs to the Columbus area. The folks out of work might say what so many others have said before them, “All my life I’ve played by the rules, gone to school, served my country, got a job and now I find myself out of work, on the verge of losing my house (if not already), without health insurance and scrapping to just get by.” We’ve heard the same over, and over, and over for how many years now? Jamie, of course, has not only survived the London Whale debacle (over $2 Bil loss plus $920 Mil fine), the Wall Street meltdown 5 years ago, and the illegal robo-signing and marketing of toxic mortgages (and the resultant foreclosures which earned Chase even greater profits through derivative credit default swaps) but Jamie also received a bonus. American Microsoft is buying Finnish Nokia. According to many economists, inevitable! Microsoft is sitting on a pile of cash. As long as it is spent overseas (and not brought home), no tax is due. All of this is in perfect accord with “the rules” that the workers without a job played by so assiduously. How is this possible?

 

            Bill Moyers had Robert Reich on over the weekend. No judgmental good guy/ bad guy for his tenure as treasury secretary under the Clinton presidency will be pursued here (a digression that would NOT contribute to what is at stake today). Mr. Reich was on to promote his new movie (of all things!), Inequality For All, a didactic documentary. The film is a primer on the interface of “economics” (the great inscrutable mystery that determines all our lives) and “democracy” (our government, or at least what we’d like to believe is how we govern ourselves). Put simplistically, according to the current University of California public policy professor the economy IS the rules put into play by society through its own governance. In our case, unlike a monarchy or totalitarian regime, it is the rules formulated through the determinations of the democratic process. What we have today is the outcome of laws, rules and regulations implemented before, during and after Reich’s service to the president and country in the 1990’s. Chase, Dimon, Microsoft, etc. all are doing what is allowed, even promoted, by the “rules” put into play over the last 40 years. It would be “irrational” for them to do otherwise. Through all the gloom and doom Mr. Reich is upbeat, positive, downright hopeful. This is because he believes that, in a democracy, we can likewise change the rules and thereby change the economy.  How does this work?

 

            Two recent news articles cut to the chase. They are current, relevant, and interface precisely with contemporary efforts to deal with the economy through the democratic process. Prior to passage of the Patient Protection and Affordable Care Act, there were numerous television and film documentaries regarding health care in the US, other countries in the world, and the economics involved. There were images of long lines of infirm people in North Carolina, Tennessee, etc. for donated health care who hadn’t been to a doctor. We had accounts of hospitals, and physician organizations saying something must be done as health care cost are rising at (some years) double the inflation rate. The cost of health care is making it unavailable, where in other countries it is less costly and accessible, etc. Suffice to say, all this was a motivating factor for passage of the ACA. The ACA has been in place now for going on three years, and has passed constitutional muster. In an article entitled “CBO: We Have a Tax Problem, Not a Spending Problem” Nicole Woo of the Wall Street Cheat Sheet (9-23-13) reports: “The non-partisan Congressional Budget Office has released its 2013 Long-Term Budget Outlook, and it has some great news. Specifically, CBO is predicting substantially lower healthcare spending this year and 25 years into the future. While last year CBO estimated that, “Federal spending for those [health care] programs would grow to 9.6 percent of GDP in 2037; in that year, 6.0 percent of GDP would be devoted to Medicare, and 3.6 percent would be spent on Medicaid, CHIP, and the exchange subsidies.”” In online Forbes (9-24-13) “Health spending slows as Obamacare sign-up looms” by contributor Bruce Japsen “Health care spending continues to slow as more medical care moves to less costly outpatient settings, consumers choose cheaper generic drugs and insurance companies alter plan designs to increase out-of-pocket costs on workers, a new Health Care Cost Institute study shows.

The Health Care Cost Institute, which analyzes claims from major U.S. health plans, said the growth rate of health care spending in 2012 “remained low” for the third straight year for nearly 156 million Americans 65 years old and under with employer-sponsored coverage, growing just four percent. The health spending rate grew 4.1 percent in 2011, the institute said.

The institute’s report is the latest to show spending on medical care slowing. A report last week from the Centers for Medicare & Medicaid Services that was published in the journal Health Affairs said low rates of health care spending would continue through 2013. Both studies come as states and the federal government prepare to rollout broader coverage for uninsured individuals under the Affordable Care Act.” The article ends with, “ The independent nonprofit institute [the Health Care Cost Institute], which bills itself as nonpartisan, is supported by investor-owned health insurers Aetna, Humana, and UnitedHealth Group and the California-based nonprofit health insurer, Kaiser Permanente.” Nicole Woo adds this contextual insight: “CBO specifies that The American Taxpayer Relief Act of 2012 (which made permanent most of the Bush tax cuts and indexed the Alternative Minimum Tax to inflation) as the cause for the bulk of the decrease in taxes. As a result, it lowers its estimates of federal revenues a portion of our economy. ”Federal revenues are now expected to be substantially lower in coming decades. By 2023, revenues are projected to be 2.8 percent of GDP lower than projected in the 2012 analysis: 18.5 percent of GDP rather than 21.3 percent. Revenues are now projected to equal 19.7 percent of GDP in 2038, 4.2 percentage points lower than the 23.9 percent figure projected last year.”

By lowering its projections of future spending levels as well, CBO shows that we have a tax problem, not a spending problem. “Non-interest spending in 2038 is projected to be 1.4 percent of GDP lower than in the 2012 analysis. Total federal spending on everything other than major health care programs, Social Security, and net interest is now projected to equal a smaller share of GDP throughout the next 25 years than CBO projected last year.”

In addition, CBO quantifies how high unemployment rates do damage to the economy (and, by extension, future debt levels). “CBO raised its projection of the unemployment rate over the long term from 5.0 percent to 5.3 percent. That change in the long-term unemployment rate reduced CBO’s projection of the level of GDP by about 0.6 percent after 2027.”” This is the same Budget Office that our “democratically” elected representatives pay to inform them regarding economic policy decisions.

           

Robert Reich is right to be hopeful about the economy. Of course, Bill Moyers never asked the public policy professor how he felt about democracy in America.

 

Violence Of Direction

“The learned and the studious of thought have no monopoly of wisdom. Their violence of direction in some degree disqualifies them to think truly. We owe many valuable observations to people who are not very acute or profound, and who say the thing without effort which we want and have long been hunting in vain.”

Ralph Waldo Emerson, essay The Over- Soul, from The Portable Emerson, pg. 216

 

The following is a commentary posted online 9-18-13 by Jared Spurbeck who  lives in Cary, N.C. and appeared on the Yahoo Contributing Network:

 

“Let’s get a few things straight.

 

First, House Republicans are not going to stop Obamacare, also known as the Affordable Care Act. They’re not going to prevent freeloaders from having to buy health insurance (to help pay for care for people with actual medical conditions, which the ACA also requires insurance companies to stop coming up with excuses not to cover them), and they’re not going to prevent the Medicaid expansion, which will let poor families and workers get chronic and life-threatening medical conditions taken care of. Their leadership has very publicly refused to commit to a course of action, and it’s kind of ridiculous to talk about “defunding Obamacare” in the first place.

 

Second, it’s even more ridiculous to talk about generally defunding the government (via refusing to raise the debt ceiling or continuing “sequestration”) versus letting Americans have some semblance of the health care coverage people in practically every other first-world country have already. That’s because those aren’t the only two options on the table. We can choose what we want our society to look like, and it doesn’t have to be a “winner-take-all, the rest of you fight for the scraps” universe.

 

I currently depend on government-funded health care for life-saving medical interventions, through hard-to-find and hard-to-sign-up-for programs that I didn’t even know existed and that put a hard limit on how often I can see a health care professional. I wanted to go on Medicaid in 2014, but the Republicans in my state of North Carolina rejected federal funding of the ACA Medicaid expansion, over the protest of the state’s doctors and even though it’d cost them nothing.

 

I’m scared that my life will be thrown away.

 

Right now, we have widespread unemployment and poverty because no one’s spending enough to justify hiring more workers. Poor and middle-class Americans can’t spend the money, and people with unearned wealth simply aren’t.

 

We, as a society, go to a lot of trouble to make life easier for rich people. We build the roads, bridges, and public schools that make the United States a better and safer place to do business than Somalia, and even though they get most of the benefits, we don’t even make them pay their fair share of the cost. Instead, we let them deduct practically everything from their taxes, avoid paying corporate income tax, and rewrite the tax laws every year with the help of their full-time accountants.

 

“Sequestration” is basically rich people saying — via the House Republicans — “screw you all, my $300,000 wristwatch is more important than your child’s health care.” Or her preschool program, or her breakfast, or her teacher’s salary. Why do we think this is OK? Do we really have to let people curl up and die — 502 of them every week in 2010 — to make sure rich people get to keep all the unearned wealth that we worked so hard to give them?

 

Why are we even talking about this in the 21st century?”

Economics Is A SNAP

            You get up in the morning and it is drizzling. The night before the 11 o’clock news didn’t forecast any rain. Tonight’s news the weatherman will give an explanation for why it rained today and will or won’t tomorrow. Then again, he may choose not to even mention last night’s forecast. Gas prices in Newark are about the same. The Nigerian Oil Minister stubbed his toe, so the prices must go up. Today oil is trading at over $105 a barrel yet Newark gas prices are around $3.30 a gallon. During the fall, competition with heating oil production was always cited as a reason for raising prices. If we’re lucky, we get an explanation from economists. Stock quotes run the same. Projections say this or that figures or earnings reports are due out. The Fed has spoken and stocks go up or down. Recently, after the stocks went down when the reports were up, an explanation was given, “the market was disappointed with consumer spending.” Like the weather, the price of oil and the stock market, it all must just be too much for any central Ohio resident to fathom. In an article entitled “Income gains for 1% break records” (CBS/AP/ September 10, 2013) it is reported that “The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share since 1928. Last year, the incomes of the top 1 percent rose nearly 20 percent, compared with a 1 percent increase for the remaining 99 percent. The share held by the top 10 percent of earners last year reached a record 48.2 percent.” Analysis questions what or with whom the market was disappointed. Was it with the 90% of Americans who earn 52% of the income? Did they not “consume enough”, spend enough with their consumption? Or was it with the 10% of Americans who earn 48% of the income? Are they not consuming 48% of what is needed to make the economy the dynamo of success that the market demands? It gets complicated when one realizes that the 90% who take in 52% of the earned income probably don’t get much of it from capital returns in the market itself. The 10% that earn 48% probably do. Which all begs the question who is disappointed in whom? If the market is disappointed in the lackluster pace of consumer spending could it be that it is really the 10% that are disappointed in the other 90% for not helping them earn an even greater share of the country’s earned income? Our leaders tend to feel it is the latter. If only we put even more money into the pockets of the 10%, they will in turn invest in making us all better off. Someone with more bathrooms in their house than bedrooms and kitchens and rec rooms combined will obviously be “consuming” more. Common sense will still tell us that an individual, whether rich or poor, can only dump so much, so often, in one day. There’s a limit to how much they can contribute. And that’s the part that the great wizard behind the curtain doesn’t want the “consuming” 90% to consider. It is called surplus, what is over and above what can be “consumed” and hence is invested or saved. The 90% saves little, for they consume most. The 10% can’t consume it all. Much gets “invested”. All investments are not created equal. 9-13-13 Bill Moyers’ guest Dave Zirin states “I live ten minutes away from a horrific slum with mold and ventilation problems and rats. Alex Rodriguez owns the slum. It’s called Newport Ventures. And this has become a big local story in Washington D.C. that Alex Rodriguez owns this horrific building. I mean, so the guy has made $350 million in his career.” Money makes money. If money is disappointed with the returns, it finds ways of making more money. Not all of them are in the public interest. Some are just in the interest of making more money (and not being disappointed).

            Speaking of disappointment, the Newark Advocate ran an article in its 9-15-13 edition entitled “Food stamp recipients facing tougher rules.” Yes, it was insightful in how things are about to change. The online comments for the most part perpetuated the myth that SNAP recipients were mostly spending it on pop and potato chips and just couldn’t wait to get up in the middle of the day so they could go out and swipe their cards for more. No mention was made of the farm bill, and the other subsidies that are abused, to the tune of even more dollars spent on fewer “corporate” individuals (the same ones who lobby to include soda and chips as part of the SNAP program). “The Department of Agriculture paid out $20.3 million more than it should have last year to farmers and other aid recipients, according to a new report released Wednesday by the USDA’s inspector general. As members of Congress return from their recess and prepare to head to conference over a 2013 farm bill, establishing policy for farm subsidies among other agriculture-related policies, they confront news that the USDA sent out more money than it should have for subsidies and that other farmer assistance rose by 67 percent in 2012. In comparison, overpayments totaled $11.7 million in 2011, according to the IG’s report, which tallied only “high-dollar overpayments.” For an incident to make it into the report, the USDA had to pay out 50 percent more than it should have and the amount of overpayment had to be a minimum of $5,000 per person of $25,000 per entity. In one example, the IG says the USDA made two payments of $45,096 each as part of a Farm Service Agency program when the payments should have each totaled $2,048. But the biggest overpayments were made to recipients of subsidies provided through USDA’s Federal Crop Insurance Corporation, according to a breakdown of the dollar amounts included in the report. The USDA spent $7.149 billion in fiscal year 2012 to subsidize the crop insurance premiums that farmers pay.” Maybe the Advocate didn’t bother to mention the inspector general’s report carried on multiple sites because Licking County and central Ohio is the heart of agriculture. I used the quotes from BILL TOMSON’s 9/4/13 Politico article entitled “Feds overpaid farmers by $20 million The USDA paid 50 percent more than it should have.” In conjunction with this it is important to note that today is the anniversary of the collapse of Lehman Brothers in 2008. This was an opportune time for our governor to look about for new employment, as he wore a Lehman Brothers uniform suit at the time. Various sources cite the US government bailout as being close to $250 million. It is also reported that most of that money has been repaid. The executives of companies like Bank of America, Goldman Saks, Chase, etc. can pride themselves with ads on how they’ve succeeded (as well as given themselves bonuses) thanks to a little help from “our” government (The Supreme Court Citizen’s United ruling now includes them in the “our”.). But the thousands of folks who have turned their lives around thanks to SNAP and other public assistance programs can’t afford to “pride themselves” with ads giving witness to their contributions to our economy and the quality of life in America. Instead, they find themselves shackled with the servitude of wasting public money through addiction to pop and chips. In light of the inspector general’s findings, The Newark Advocate could have earnestly anticipated this mythical response by providing some context. The enormous subsidies given to a limited number of individual corporations that account for overpayments offset the small percentage of abuse found within the SNAP program.

 

Some Assembly Required

            We’ve all been to some sport match from another culture or time, or maybe a theater performance, even a new board game with friends. “What are they doing and why” immediately springs to mind as well as what is a “yellow card”, or “icing”, or a “contralto.” The one who owns the language owns the game. With the Patient Protection (yes, that’s part of it) and Affordable Care Act, we need to hop in as participants, some of us without ever having played the game.

 

            In central Ohio it is difficult, if not impossible, to hold a job without owning a vehicle (public transportation is not of the caliber that would permit anyone who relied on it the accuracy of appearing at work, on time, everyday). The state of Ohio requires insurance for the use of such a vehicle on the roads we all share in common. To pay for this “coverage”, the “policy” requires a “premium” to be paid (monthly, quarterly, half year, etc.). The premium is what the policy will cost the person insured (the rent). The policy is the contract that spells out what the buyer (policy holder, the insured) is obligated to, what the seller (the insurer, the provider) is obligated to, etc. Lots of fine print and more terms! All of which spell out the “coverage”, what is included and what is specifically not included. Health insurance differs from property insurance (car, boat, home). Although AFLAC may make it look simple with a cute duck, it can be quite convoluted because of the uniqueness of individuals and what it takes to make/keep them healthy (side effects may include, but are not limited to, death and dying). With health insurance, as with property insurance, there can be a deductible. This is the initial amount of the cost of any claim which the buyer (the insured) agrees to pay. A claim is when something that is covered by the policy occurs and the policy holder (the insured) “claims” that under the terms of the policy, the insurance provider now needs to do their part and pay the amount owed to cover the costs. If an operation costs a total of 10K, and everything involved with that 10K billing falls under the coverage that my policy provides for, then my claim will be for the entire 10K. If the policy I contracted has a 1K deductible. Then 9K would be paid. If the operation cost 1K or less, I could not file a claim because my policy stipulates that I have agreed to pay the first 1K of whatever occurs. The amount of the premium for a policy reflects the amount of deductible; the greater the deductible, the lower the cost (premium) of purchasing that policy (having that coverage). Confusion swirls around the term “co-payment”. Health insurance coverage is a business to earn a profit for the company. No different than Walmart or Home Depot, if the company can provide its own transportation, products or services through its subsidiaries, then it will. The subsidiaries contribute to the money making endeavor of the parent company. A co-pay is money the insured must pay per each doctor’s visit, therapy session, or pharmacy purchase, etc. Like a deductible, it is the upfront amount agreed to with whatever coverage is purchased. It differs from a deductible in that it is not part of an overall “claim” but rather it is ongoing care (akin to repair of a vehicle after an accident and the regular routine service required continuously). A health insurance company may have subsidiary health care providers, thereby allowing them to offer a lower premium but requiring that the insured utilize the services of those subsidiaries with a specified co-payment for each use. The Patient Protection and Affordable Care Act is centered on health insurance exchanges or markets. Like a farmer’s market, the various businesses which wish to offer coverage within the parameters of the ACA (Affordable Care Act)  list the policies they offer, what each policy covers, what the terms of the coverage are (what’s included, not included, deductibles, co pays, etc.) as well commitments (on the part of the insurer as well as the insured). The ACA has grouped coverage into 4 categories so that it is easier to compare like with like. The categories have been described as bronze, silver, gold and platinum (or catastrophic). Essentially, the bronze has the highest deductible with the catastrophic having none. The bronze should be at the lowest “cost”, with the catastrophic the most expensive. The premium amount of any policy with any of the categories depends on the coverage spelled out in the individual policies offered by the different insurers. A single insurer could offer several different policies within the silver category. One policy may involve using the insurer’s subsidiary health care provider, another may allow the insured to choose whatever source, etc. The premiums on these different products (the policies with their coverage differences) will likewise differ although they will qualify as havng the characteristics of all silver policies (in terms of deductibles, etc.). The enrollment period is the window of time in which a policy is purchased, modified or changed. As coverage is for only a year, during the enrollment period the insured as well as insurer can decide to renew or make a change. The final term which has been part of business but rarely indicated is “subsidy.” Several years ago it was brought to this writer’s attention that the Swiss government pays a subsidy to the inhabitants of the quaint little villages and farms in the high altitudes of the alps. Yodeling aside, having the cheese, mountain climbing, skiing, etc. associated with “Switzerland” is incredibly important to the Swiss identity, to tourism, maintaining the “quality” of Swiss products, etc. But no one really wants to live up there isolated and cut off with bad satellite reception and no Seven Elevens. And if they have kids, they likewise want them to go to college, be soccer stars, etc. It is hard to play soccer on the side of a mountain. So the government assists these folks with a “subsidy”, a payment that helps insure that the mountain lifestyle continues to benefit all Swiss. In the US this is part and parcel of our agriculture policy (since being able to eat is essential to national security). The bank bailout instituted at the end of the Bush presidency was described as a subsidy, as well as payments to schools, manufacturers of nationally vital products, energy producers, etc. (in fact most CIC’s can be described as subsidies since payment is made for the ultimate benefit of the community served).  It’s there, unseen, but essential in making sure that America has the benefits of these endeavors, at a cost the individual consumer can afford. The ACA likewise has a built in subsidy. This is the portion of the health insurance premium that the government will reimburse the provider. The amount of the subsidy varies with the income level of the insured. It is likewise paid either directly to the insurer providing the coverage or credited to the income tax of the insured. So the same policy offered to two different income level purchasers will involve a different cost for each.

 

            The ACA only, and exclusively, operates through an online exchange — meaning one has to have access to the internet to obtain health insurance. The Licking County library offers access to the internet on computers available to its card holders. According to the Newark computer desk librarian, no formal policy has yet been established with regard the ACA. The 9-8-13 Newark Advocate article (Exchange 101: The basics of the new health insurance marketplaces) discusses health insurance navigators, and likewise (as this blog has done) points out that the Ohio legislature has chosen to officially license and recognize a limited number. The librarians at the computer desk will assist with the operation of the computers, accessing the internet and interacting with any programs but they cannot assist with anything pertaining to the ACA. They are NOT health insurance navigators. The application to obtain a library card (in order to use the computers) requires personal identification such as a photo ID or two pieces of mail addressed to the applicant, etc. The card is issued immediately, along with a pin that grants access to the terminals. There is a 2 hour limit on each use. Notify the computer desk librarian if you are unfamiliar with the use of a computer and are applying for health insurance; this will allow for more time. This is all happening at healthcare.gov where we will meet next time.     

It Is Getting Real Gnarly Out There, Dude

            Insurance. Can’t live with it; can’t live without it. Pay me a sum of money regularly and if something goes awry, I will cover the costs incurred by any loss you suffer. Insurance is akin to derivatives which helped cause the near meltdown of the financial industry 6 years ago. Unlike derivatives which are often described as a bet on something to fail, insurance is based on a contract that specifies obligations and responsibilities. Due to the contractual nature of what is for the most part intangible, and to a certain degree subjective (“if your house burns down I promise to reimburse the loss.” Intangible promise made. “But that melted folding aluminum lawn chair with the torn webbing was my granny’s and is a priceless antique worth thousands.” Subjective appraisal), the state long ago stepped in to regulate this business; both to protect and promote the business itself as well as the interests of the consumer. The state IS very much involved in the Affordable Care Act though it begs to differ, saying it is a federal program. An AP article (9-3-13) by Scott Bauer, Insurance rates released by Wis. gov questioned, mirrors the controversy spawned in Ohio when Lieutenant Governor Mary Taylor released cost increase projections on premiums for health insurance coverage in Ohio after January 2014. In both cases independent study groups, as well as advocacy groups for consumer citizens, said the projections were flawed and didn’t reflect the entire package of subsidies, incentives, as well as benefits of increased enrollment.  In an online article entitled “Obamacare Rate Shock Isn’t What You Think” Adrianna McIntyre of the University of Michigan and Austin Frakt, health economist with the Department of Veterans Affairs present figures showing this to be not so; that it will make health care more affordable and enable young people to enter their most productive years without the anxiety of no health care protection. Many articles have pointed out that because health insurance currently offered will need to meet the “essential health benefits” specified by the Affordable Care Act and health insurers cannot deny coverage to anyone because of pre-existing conditions (and will thus have no excuse for providing insurance coverage) the cost of health insurance will increase. This is countered by economic analysis that says the increased pool of those insured (more buyers) will offset the initial shock of coverage to those previously uninsured. The most popular aspect of the ACA, embraced by both proponents and opponents has been the extension of parental health insurance coverage to their offspring who are no longer children but young adults. McIntyre and Frakt conclude “Rate shock isn’t a myth, but the notion that Obamacare transfers significant wealth from the young to the old is. Of course, the more that young and healthy consumers believe it’s real, the more likely they’ll be to opt out, pushing premiums higher for everyone else. It’s a cynical way to perpetuate the market dysfunction that Obamacare is intended to address.” Rate shock or not, health insurance aside, health care costs continue to increase faster and more extensively than the overall economy itself. Althea Chang reports: “Insurers stand to benefit from the impending health care mandates, however. “Insurance companies are happy that they’re getting more volume into their system,” Clifford said [“Tim Clifford, co-president of national account services at ADP”], but those companies face added risk since they’ll no longer be able to exclude consumers with pre-existing medical conditions.” (The financial impact of affordable health care 8-29-13, Yahoo Financial)

           

And now for the derivatives part, the bet on something to fail. Online Bruce Japsen (To Help Navigate Obamacare, United Way, Catholic Church, Others Get $67 Million 8-15-13): “The Obama administration said navigators are “trained to provide unbiased information in a culturally competent manner to consumers about health insurance, the new Health Insurance Marketplaces, qualified health plans, and public programs including Medicaid and the Children’s Health Insurance Program.”” But the Ohio legislature recently regulated this aspect requiring that insurance navigators be licensed and limiting their number. In Florida, which like Ohio opposes Medicaid expansion as well as state run health insurance market exchanges, “Republican opponents of the reform law were the driving force behind Florida Senate Bill 1842. Signed into law by Governor Scott in May, the legislation prohibits Florida’s Office of Insurance Regulation from providing any real protection for consumers from unreasonably high health insurance rates.” (Tom Brown for Reuters Top Florida health insurer touts Obamacare pain relief 8-31-13). In Browns article it is reported that ads are running touting: “”When the new healthcare law takes effect, you may be surprised how much more you could pay for health insurance,” says an advisory to consumers from Blue Cross and Blue Shield of Florida, also known as Florida Blue. “Find out how much you’ll save if you buy now,” adds the advisory, which has been mailed over the past month to homes of existing policyholders and potential new clients. “Let us help you get the best deal on health insurance right now,” the notice says. “We can even tell you if you can get help paying for coverage from the government.”” Caroline Humer for Reuters (6-29-13) headlines: Aetna pulls out of another Obamacare health exchange. She writes, ““Michener [Aetna spokesperson Cynthia Michener] said the full list of state exchanges where Aetna will participate is still being finalized. The new online insurance exchanges are the lynchpin of Obama’s healthcare reform, representing a massive technology build-out that has run up against multiple delays and political opposition in many states. In their first year, the exchanges aim to provide coverage to 7 million uninsured Americans, many of whom will be eligible for government subsidies. Aetna’s large competitors, such as UnitedHealth Group Inc and WellPoint Inc, have also planned limited entries into the new exchanges while they wait and see whether they operate smoothly and whether enough healthy people sign on to offset the costs of sicker new members.” Later she writes, ““Since then, it has withdrawn applications in Maryland, Ohio, Georgia, and Connecticut, where it is based. In Maryland, Aetna’s decision came after state regulators ordered the company to lower rates dramatically from what it had proposed.”  Finally, in a 9-1-13 online article, How Rick Perry’s And Bobby Jindal’s Medicaid Snubs Boost Private Insurance Costs, Bruce Japsen writes: “Health insurance rates for individuals purchasing private coverage could jump 8 to 10 percent in Louisiana, Florida and Texas where state political leaders have decided against expanding the Medicaid health insurance program for the poor under the Affordable Care Act, new research indicates. In a new study from the nonprofit research organization RAND Corp., researchers said the lack of an expanded Medicaid program will force more lower income people into the individual insurance market via exchanges created by the health law to provide more private coverage. The cost increase from this shift of more people to the individual market “reflects an influx of slightly lower-income and less healthy enrollees onto the exchanges,” RAND researchers wrote. “For these three states, these newly eligible individuals could cause premiums standardized for age, actuarial value and tobacco use on the nongroup market to rise by 8 to 10 percent, relative to scenarios that include Medicaid expansion.”” Tom Brown in the previously cited 8-31-13 article writes: “Florida Blue said the advisory is part of a direct mail advertising campaign aimed at drumming up new business for the Jacksonville, Florida-based giant, which reported $8.9 billion in revenues last year and covers more than 4.3 million people in its primary health business in the state. The company, a leading contributor to the political action committee of Florida’s Republican Governor Rick Scott, is one of nine insurers that have applied to sell non-group policies on the state’s new marketplace and the only one that promises to cover every county in Florida.” The vulgar, “on the street” definition of what a derivative is, and how it works, is that it is a money maker (for the seller) no matter how it turns out. In this case the “it” happens to be the Affordable Care Act and health care/health care costs for all Americans.

 

To sum up, AP’s Jonathan J. Cooper (States experimenting to lower health care costs 8-28-13) writes: “Most of the experiments are too new to produce reliable data about their success, but health policy experts warn that the rapid rise in costs is unsustainable. “It has to end eventually,” said Larry Levitt, senior vice president of the Kaiser Family Foundation, “because we can’t have an economy driven entirely by health care.””

 

As Jerry Lee Lewis would say: “Think about it.”