Questions of the Moment

Do health insurance companies make to much money? If they do, how much is to much?

Basis for the questions ... There were two themes that had struck me. The first was the idea that health insurance is all about making money and not about providing coverage. Apparently one aspect of the bill now in the house is a stipulation that limit overhead (which I assume would include salaries and profit) to 15% of premiums. The second was that the health insurance industry is currently generating a 2.2% profit margin. When compared other industries -- Big Oil at 8%, railroads at 12%; telecom / networking gear at 24% -- their profits are relatively small.

Break for reality ... Insurance companies do not make that much money. For the 2.2% there is a massive amount of cost associated with processing claims, negotiating with providers, and managing risk. The demagogues in Congress, on left wing talk radio, and in the progressive movement need a target to blame and insurance companies are it. What needs to happen with insurance companies is that they be allowed to focus on offering insurance and be permitted to move out of the payment processing business.

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Why hasn't President Obama done anything to reduce gas prices and clamp down on Big Oil profits? How am I supposed to fill my SUV when the price keeps going up and up and up?

Basis for the questions ... I was listening to a talk radio show (no idea who it was) and they had raised this point. Looking back to the campaign, there had been much discussion on how much oil cost and the question was why wasn't W doing anything about it? For the folks on the left, one answer was because W and Cheney were in the pocket of big oil and had vested interests in Haliburton. This also provided another reason for the invasion of Iraq because we needed the oil and W and Cheney needed the profits that came with it.

Break for reality... President Obama has just as much say on the cost of oil as W did, which is to say "Not Much". Certainly if Obama were to make drastic changes in the American economy the boosted worldwide demand, discontinued all US Oil production, or attacked Saudi Arabia then we would see a price increase. But short of eliminating all oil consumption in the US (or other major countries) he is just as stuck to the whims of commidity traders and the international market as W was.

What's Wrong With America

If you are looking for a clear example of what is wrong with America, look no farther then Ed Schultz. For some serious scary reading check out his blog as well. Warning: the material on Ed's Blog is some seriously whacked out stuff.

Obama, Joe the Plumber, and All That

We saw this with President Obama's exchange with Joe the Plumber but he was able to successfully characterize the outrage on income redistribution being Joe's problem, not his.

If America had access to Obama's history and had seen his views dating all the way back to college, specifically "... the Constitution allows for many things, but what it does not allow is the most revealing. The so-called Founders did not allow for economic freedom. While political freedom is supposedly a cornerstone of the document, the distribution of wealth is not even mentioned. While many believed that the new Constitution gave them liberty, it instead fitted them with the shackles of hypocrisy."

Would it have made a difference?

Are You Offended?

This started with a piece on MSNBC "Obama: Excessive pay 'does offend our values'" that definitely offended me but not for the reasons President Obama is apparently concerned with:

How do we find ourselves in a position where a non-elected / non-Senate confirmed individual can dictate the earnings of private citizens with no oversight from Congress and apparently no recognition of the problems caused by such policies? Why is a law required to increase the Federal minimum wage but a “Compensation Czar” is able to dictate executive pay? What are the odds that companies the government lent money to will be able to pay back the loans if there is no incentive for the talented individuals capable of rebuilding them will stick around? When will the government address its role in causing this financial crisis? Why is the person responsible for both the oversight of compensation and the IRS a Wall Street insider and an admitted tax cheat? When did we convert from being a democratic republic founded on free enterprise and capitalism to fascism?

If the President is really concerned about offending our values, would it be possible for him to offer the type of leadership that represents that values we hold dear? I’m guessing not.

Thinking About Health Care

With the hubbub over making changes in the way healthcare is funded and delivered, it seems to me that our elected officials are truly missing the point on what we need in the way of reform. The focus seems to be on the 15% of the populace that doesn’t have proper coverage with poor accounting to the 85% that does. There also seems to be a total disconnect on what the real problems are and a misguided belief that government delivery systems – as evidenced in Medicare, Medicaid, and Veteran’s administration – are good models for addressing the healthcare requirements of the nation despite the problems inherent to each of these programs.

Today, the United States seems to have the best and worst of healthcare options. The best boils down to one component: choice. Comparatively, we have far more options associated with healthcare than the rest of the world. The worst also boils down to one component: cost. We spend far more as a percentage of GDP than any other industrialized nation. We appear to fall somewhere in the middle (depending on whose studies you read and what the focus of the study is) for most of the other measurements such as quality of care, access to care, and medical advancements.

Since I fall into the 85% of the population that does have coverage and pay a large amount of money each year on insurance coverage (yes, my employer subsidizes it but the majority of the burden for family coverage falls on me), my voice and needs have not been a large part of the discussion on health care reform. Worse yet, rather then looking at addressing the real issues for healthcare in America and making structural changes to address them, we are looking to spend trillions enhancing the broken parts of our system.

If we could take a step back from the abyss, here are some areas that should be driving the reform process:

Cost Control – Let’s face it, we spend way too much on health care. The idea that the cost of healthcare can increase by more than inflation each and every year and business and individuals can continue to absorb this indefinitely is crazy. But this is exactly what has been happening. The impact of the increased costs causes businesses to become uncompetitive in the global economy, flattens or depresses wages in real terms, and limits access to healthcare based on affordability. Our current system needs serious changes to support reform and there have been too many sacred cows that restrict progress. Adopting a health insurance approach instead of a health care payment program, expanding pool sizes, enacting tort reform, reducing administrative costs, eliminating minimum coverage requirements, etc., etc., etc. should all be on the table. Rather than focusing on spending more (which is what Congress is working on now), the first step should be enacting structural reforms that will reduce that overall cost of healthcare. We simply can not continue in our current model.

Health Insurance vs. Health Care Payment Plan – Everyone talks about health insurance but what we really have is a health care payment plan. Our health care payment plan is expected to cover the majority of medical costs while minimizing out of pocket expenses. The idea of insurance is to create a safety net that protects us from the unexpected and manages our exposure to risk. With our current system, we have no real idea what a procedure costs (ranging from an office visit to open heart surgery) and it is difficult to make informed decisions on how best to seek care because we are almost totally isolated from the financial considerations associated with going to the doctor, med-center, or emergency room. If every time we needed an oil change, we used our car insurance but had no idea what the cost of oil change was and no way to differentiate the services associated with one service provider from another, then we’d also have out of control costs on car insurance – even if risk factors were identical. One idea that has been tried but hasn’t stuck is the concept of healthcare savings accounts. If instead of paying $10,000 per year for my families Health Care Payment Plan I was able to put $5000 into an HSA AND then apply the other $5,000 to actual insurance that would cover the expenses occurred above the HSA, then we’d begin to see both the potential of allowing people to make decisions on their own while still providing the safety net of coverage needed when you or yours require more than a regular checkup or assistance with a common malady. As a one-off approach (as now implemented) HSA’s don’t create the economy of scale needed to impact costs; with universal implementation HSA’s would promote savings, create better informed healthcare consumers, and drive down costs or both health care and insurance coverage.

Catastrophic Coverage – The idea that you can walk into an emergency room sick or injured and walk out bankrupt is a serious problem and represents a lose – lose – lose situation since the patient loses most of his/her assets; the hospital, doctors, and related entities don’t get paid; and the losses associated with the bankruptcy are passed on to the rest of us in the form of higher costs. Enacting a national insurance program that covered everyone up to retirement age / medicare enrollment would address this issue.

Insurance Scams / Pre-existing Conditions – The underlying goal of insurance companies is to limit the amount of money they pay out in claims in order to maximize their profits. When done legally and ethically, this is simply good business but the industry has a track record of abusing their trust with little or no repercussions for acting inappropriately. Similarly, insurance companies have no problem accepting payments for years and then citing a “pre-existing condition” to deny coverage. To address these abuses, there should be significant dis-incentives for insurance companies to arbitrarily / wrongly deny coverage and the concept of a pre-existing condition could be eliminated by the creation of larger coverage pools and catastrophic coverage options.

Government involvement – Somewhere in the Constitution I missed the part where it says healthcare is a God granted right to which all Americans are entitled. There are other countries that have this in their constitution, but we do not. So if you feel slighted by this omission either work to change our Constitution, move, or stop whining. We “don’t give a damn about what you think you’re entitled to”. The focus of government should be to provide a structure that balances cost with choice, allows America to compete in the global economy, and supports the quality of life we both expect and appreciate as Americans. We do not need the Federal Government to become the core provider and assume responsibility for roughly 1/6th of our economy to accomplish these objectives.

How to Start Each Day with a Positive Outlook

1. Open a new file in your computer.
2. Name it Barack Obama
3. Send it to the Recycle Bin.
4. Empty the Recycle Bin.
5. Your PC will ask you: "Do you really want to get rid of Barack Obama ?
6. Firmly Click Yes.
7. Feel better?

GOOD! Tomorrow we'll do Nancy Pelosi.

Being Sorry About Slavery

There is no question that slavery and what was done to both Native Americans and Blacks starting with the discovery of what is now the United States and continuing through the Civil War was a terrible injustice. It is incredibly easy to sympathize with these peoples and feel sorry for them. Without splitting any hairs ... slavery was bad.

As if this was still an open question, both the House and Senate have passed resolutions apologizing for slavery. Whew, I can't tell you how much better I feel now that has been cleared up. But there is a huge difference in feeling sorry about these events and taking responsibility for them and this is the scary part of the legislation that is making its way through Congress.

Taking a quick look around the house .... Nope, no slaves. Looking at the family tree and my ancestors ..... Nope, no slaves. Looking around the country just to see where we stand .... Nope, no slaves, former slaves, or people that owned slaves. Did you get that? We haven't had slavery in this country for something like 144 years. Nearly a century and half.

I'm not sure why we feel the need to apply the morality of today to events that happened a century and a half ago but hopefully now that we've passed some feel good legislation we can move on to more important things.

Recovery Plan = Biggest Tax Decreases in History

Perhaps I was the only one in America that caught this but this statement is an interesting insight into the way the Obama administration is positioning the Recovery plan.

http://www.youtube.com/watch?v=58fCsW4D3Uc (at about 6:07 of the interview and I couldn't believe Juan gave him a total pass)

Bill Burton describes the Recovery Plan as one of the "biggest tax decreases for middle class families in the history of our country". Huh?

I suppose if you break the plan out into individual parts (wikipedia link) you might be able to buy into this spin but the real truth of them matter is that the Economic Recovery Plan of 2009 is turning out to be the "biggest waste of taxpayer dollars in the history of the country".

Getting Directions From Keith Olbermann

Last night (4/30/09) Keith Olbermann did a bit trying to explain how Bill O'Reilly was lost and and didn't know his right from left in conjunction with where Fox is in comparison to NBC.

This is somewhat visual (and I'm not going to post a picture) so you'll have to use your imagination. The crux of the point was that O'Reilly said the NBC was to the left of Fox while Olbermann felt NBC was to the right of Fox.

Well if you look closely at Olbermann's map you'd understand that it depends on which window at Fox you are looking out of as to whether NBC is on the right or left. Now my guess is that O'Reilly actually has an office window so, for him, NBC is on the left. Olbermann on the other hand either doesn't have an office with a view or has his head so far up his ass he can't see Fox. Either way, I'd hold off on looking to Olbermann for directions.

Olbermann was so much better when he stuck to sports and focused on being funny. Well ... he is still funny ... but people are laughing at him not with him.

Where all the tax deductions go

There was a letter to the editor in today's USA Today noticing that all of the tax deductions and tax shelters go to the rich and not to the poor. The writer thought it would be much fairer if everyone received the same deductions.

This line of reasoning dovetails somewhat with President Obama's comments at his Tuesday press conference about why its fair to cap the amount of deduction that "rich" people receive at the same level that "middle class" people receive.

There is a bit of reality missing from both of these viewpoints.

Under the graduated income tax system we currently toil under, the more money you make the larger the marginal (the tax percentage on the last dollar earned) tax rate is.

For single tax payers, after deductions, the marginal tax rates look like this ...

• 10% on income between $0 and $8,025
• 15% on the income between $8,025 and $32,550; plus $802.50
• 25% on the income between $32,550 and $78,850; plus $4,481.25
• 28% on the income between $78,850 and $164,550; plus $16,056.25
• 33% on the income between $164,550 and $357,700; plus $40,052.25
• 35% on the income over $357,700; plus $103,791.75

For the USA Today letter writer and other like minded people (who probably do not know any better), you might notice that the poor actually pay significantly less in taxes -- both in real and in percentage terms -- then the more well off. In fact, roughly 46% of the population pay no income taxes at all. How much more of a tax deduction / tax benefit do you need once you are at zero dollars in the first place?

For Barack Obama (who certainly does know better), if I am at the low end of the 28% tax bracket and write a check for $500 to charity I get to take a deduction just like the person in the 35% tax bracket but I will be paying about $16,000 in taxes. If I'm in the low end o f the 35% tax bracket I'll be paying $103,000 in taxes. I'm sure everyone would love to be making $358,000 per year but writing that check for $103,000 is a whole lot less fun. And then to have the President stand there and tell you you're not paying enough when about 1/3rd of your income is going straight to the US government in income taxes is fairly disgusting.