Ironically Sensible

Political Calculation's "Ironman" has a VERY interesting question regarding the mandate ObamaTax and whether (come 2014) one should buy coverage or roll the dice:

"Does it make more financial sense for you to pay for health insurance or to pay the ObamaCare mandate tax instead?"

The premise is that, at least initially, the tax is going to be much less than the premium for most people, so why bother buying insurance until one actually needs it?

What makes this such an outstanding post is that he quantifies the problem, and offers readers a tool to calculate their decision.

Very cool.

Promising Alzheimer's News

The results of testing of three new drugs may give hope to those with Alzheimer's (or those with a family member suffering the dread condition):

"Results are due within a month or so from key studies of two drugs that aim to clear the sticky plaque gumming up patients' brains.

A pivotal study of a third drug will end later this year, and results from a small, early test of it will be reported next week"

Namenda and Aricept (the two current "leaders") really just ease symptoms, but aren't considered "cures." What's remarkable about these new options is that they're not really "drugs" in the accepted sense, but "anti-bodies." Since we don't really know what causes Alzheimer's, it's something of a gamble, but the payoff could be huge: "if brain imaging or spinal fluid tests show the drugs are hitting their target, 'they will be regarded as successes ... because that would let you know you had a drug that worked."

Time will tell, of course.

Wednesday afternoon at the movies

A bit simplistic, but gets the job done:

Promises, Promises

As in broken promises:

"Nothing in the law ensures that people happy with their policies now can keep them."

That means, of course, folks with consumer-centric Heath Savings Account (HSA) plans are outta luck. And folks with higher deductible co-pay plans are, too.

But it's not just our health insurance that's circling the drain; as we've long maintained here at IB, health insurance is not health care. To drive that point home, let's hear from a surgeon who's "worked in a government-run socialized medical care system, and [seen] the waste and inefficiency:"

"The longer people worked in that system, the less work they wanted to do, because the more you wanted to do, the more they dumped on you.  So after a while you stop doing it, because they're not paying you to do more ... Because nobody wanted to work, it would take an hour to turn over the surgical room.  In my private practice now, it takes ten minutes."

So, say goodbye to 10 minutes and hello to 10 hours.

But it's not just health insurance and health care that are under the ObamaTax gun:

"Income inequality appears to be growing in the United States.  And [ the ObamaTax) will dramatically exacerbate it."

Says whom?

Says Merrill Matthews, resident scholar with the Institute for Policy Innovation in Texas. Writing at Forbes, Mr Matthews lays out his case with deadly precision, including numbers form the Census and the Social Security Advisory Board. As noted above, HSA's and higher deductible co-pay plans are soon to be verboten, forcing folks to purchase more expensive policies. Since these premiums will necvessarily eat up a larger proportion of their income, the divide between rich and not-so-rich will be exacerbated.

Just another broken promise, though.

Cavalcade of Risk #161: Summer weight edition

David Williams presents this week's cool round-up of risk-related posts, including rugby, robots and rebates.

BTW: We're scheduling Fall Cav's - just drop us a line to claim your slot.

How much is that ObamaTax in the window?

Apologies in advance for the math, but it's important to understand that almost everything we were told about "PPACA" was a lie: insurance will be more expensive and harder to get, people will be denied care, and your taxes will go up.

A lot:

•The penalty/tax will be phased in from 2014 to 2016
•The minimum penalty/tax per person will start at $95 in 2014 (and then increase through 2016)
•The $695 per-person penalty [beginning in 2016] is only for those who make between $9,500 and ~$37,000 per year. If you make less than ~$9.500, you’re exempt. If you make more than ~$37,000, your penalty [will be MUCH greater]
•The penalty is 2.5% of any household income above the level at which you are required to file a tax return. That level is currently $9,500 per person and $19,000 per couple. The penalty on any income above that is 2.5%. So the penalty can get expensive quickly if you [have a job]

But that's just the tip of the (proverbial) iceberg. Take a look at the penalty tax structure:

•Less than $9,500 income = $0
•$9,500 – $37,000 income = $695
•$50,000 income = $1,000
•$75,000 income = $1,600
•$100,000 income = $2,250
•$125,000 income = $2,900
•$150,000 income = $3,500
•$175,000 income = $4,100
•$200,000 income = $4,700

Notice anything interesting? Yup: this is a highly regressive tax scheme. In fact, over 75% of it will be borne by folks earning $120,000 or less, hardly the upper tier. So not only is this the largest such tax in history, but it's aimed squarely at what used to be called the "middle class," but which now sports a new moniker:

Peons.

There's more at the link - read it and weep.

[Hat Tip: Ace of Spades]

Interesting Paycheck Insurance Trends

"Paycheck insurance" (aka Disability Income insurance) replaces a chunk of one's paycheck if it's impacted by illness or injury. It's one of the two most complicated products we offer (the other being LTCi). Offered in both individual and group "flavors," it's pretty customizable.

MassMutual is one of the few top-shelf DI carriers still slugging away in the individual market, mostly to white- (and some grey-) collar professions. Recently, they sent out a chart identifying "policy design trends" which I found interesting. Here's a sample:

■ Over 80% of these plans are issued with a 90 day waiting period. That is, one must be disabled for three months before the checks start rolling in. This has long been the "sweet spot;" by contrast, less than 15% were issued with a 6 month wait.

■ Nearly two thirds of MM's insureds chose the "To Age 65" benefit period. This means that, once they've satisfied the waiting period, benefits would be payable to "traditional" retirement age (as long as one is still disabled, of course). About a fifth of their clients opted for an additional two year extension (to age 67).

■ Almost 80% of their policies included the "extended partial disability" rider. Also commonly referred to as "residual," this benefit looks to see if one's wallet remains disabled even if one's body has healed.

■ About half also chose a "catastrophic" benefit rider, which mimics Long Term Care insurance thresholds (eg "activities of daily living") to determine benefit eligibility.

■ I was surprised that only about half of their clients added a Cost of Living Rider, which can help as a hedge against inflation. This is most likely a result of the sluggish economy over the past few years.

It's estimated that two-thirds of folks in the private sector lack long term disability insurance. Are you one of them?

[Hat Tip: MassMutual's Harold K]

How does CBO score it...

We actually know CBO only scores what they are told to score meaning their projections will never be accurate. Here is a good example:

"Overpayments are a rampant problem in the unemployment insurance system. The federal government and states overpaid an estimated $14 billion in benefits in fiscal 2011, or roughly 11% of all the jobless benefits paid out, according to reports from the U.S. Labor Department."

If actual subsidies are projected to be $681 billion what will the real world amount be when you add in fraud, gaming the system, and government incompetence? 

At 11% that is an extra $75 Billion.

We get mail!

Alert reader Elliott S (no, not that Elliot S) sends us this item:

"Study: Women With Bigger Breasts More Likely To Get Breast Cancer"

According to the article, there's now evidence of a genetic link between breast size and incidence of breast cancer. As reader Elliott observes:

"For a given probability of cellular mutation, a larger sample size has more mutated cells."

He then makes an interesting correlation:

"Translation: For a given marginal tax rate, high income individuals pay more tax dollars."

Which prompts him to wonder:

"Should insurance companies/Obamacare encourage breast reduction procedures to reduce future cancer treatment costs?"

Well?

Largest Tax increase ever...counter, counter

The right claimed ObamaCare is now the largest tax increase ever...

The left was aghast at such a claim(their long history of being anti-tax being expunged and all) and accused them of lying...

The Loud Talker did a great job of presenting all the perspectives and letting you decide for yourself.  (If only we had some reliable institution that would do this for everything, gather the facts, present them in an unbiased manner and let us think for ourselves. If only.....)

Yes there is an argument that % GDP or $ per citizen are more accurate measures but that doesn't change the fact the claim is factually true and deny that accurate context is far more misleading. Personally being only the 5th largest tax increase instead of the largest isn't really a victory I would fight for.

Read the full article to see why controlling the House and Senate should be our number one priority.

Incentives and Economist are fallible?

This short story was on a rerun on Freakonomics;

The quick version is an economist and his wife are trying to potty train their three year old. The Economist uses M&Ms as an incentive for her to use the potty. A few days later she can control her bladder to maximize how many bags of M&Ms she can get in a day.

A three year old getting over for a couple extra bags of candy is funny.

When we are talking about 1 Trillion of tax payor dollars; not so funny any more.

Subsidies                                         $681,000,000,000
Small Business Tax Credits            $021,000,000,000
Uninsured Penalties                        $045,000,000,000
Employer Penalties                         $096,000,000,000
Cadillac Tax                                    $079,000,000,000


Total                                                $922,000,000,000

300,000,000 million Americans have a one trillion dollar incentive to outsmart a group of economist who aren't half as smart as they believe they are. It is beyond naive to think they wont figure out how to get far more then 681 billion in subsidies, every government program to date proves they can and do. Further every tax ever implemented makes it clear they will never pay the full 241 billion in expected taxes.

Cost go up, revenue goes down and this projected 1.083 Trillion increase to our deficit is now a 2-3 trillion dollar increase to our deficit.

The opening to the clip sums up the situation perfectly.

And speaking of waiting: Oy, Canada!

"At some point in time, every Canadian will be placed on a medical waitlist."

Says whom?

Says the folks who actually market "wait list" insurance to our Neighbors to the North. And they should know, since they actually live it, literally putting their money where their mouth is.

But wait, health insurance in Canada is free!

Indeed, and worth every penny (or is that loonie?).

The truth is, some lucky Canadians can skip the lines and head for the border; those left behind face often excruciatingly long wait times for treatment. Which is where the clever folks at Acure [ed: get it? "A cure"] come in:

"Medical Access Insurance provides Canadians with expedited access to specialist consultation, diagnostics and surgery for over 135 treatments and conditions. Medical treatment for covered conditions will be provided in weeks – not months or years."

One wonders about franchise opportunities as ObamaTax comes to fruition.

Waiting on the Forgetful MVNHS©

The Much Vaunted National Health Service© (the Brits' version of ObamaTax), has developed a unique and, one supposes, highly effective means for enforcing its Death Panels:

"THOUSANDS of dementia sufferers are being abandoned by the [MVNHS©], with shocking variations in the time it takes to get a diagnosis and support ... some patients are not informed for at least five years that they have the disease, meaning treatments that are available are not as effective."

Really, what a great idea! Folks with dementia are unlikely to complain about care they haven't received; after all, who'd believe them?

And by making seniors wait until it's too late for most med's to be effective, the "service" saves money on costly treatments. Of course, this is what we here in the 'States have to look forward to under ObamaTax.

And speaking of waiting:

"Tens of thousands of patients who face having to wait more than 18 weeks for [MVNHS©] treatment will be offered a bed in a private hospital."

With just shy of 150,000 Brits waiting at least 18 weeks for treatment, that's a pretty gutsy bet.

And here's the truly scary part:

"In the last year the NHS has reduced the number of people waiting longer than 18 weeks for treatment to a record low."

Almost 150,000 folks waiting over 4 months for medical treatment is a low??

Yikes!

Sure glad that can't happen here.

Wait, what?

Cavalcade of Risk #161: Call for submissions

David Williams hosts next week's Cavalcade of Risk - Entries are due by Monday (the 9th).

To submit your risk-related post, just click here to email it.

You'll need to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

Thanks!

A proposed Revolution

For years providers and pharmaceutical companies have been gouging employers and their health plans.

ObamaCare is a clear indication the government has zero interest in addressing the real problem, cost of healthcare, and more interest in social engineering and getting their hands on trillions more of our dollars.

It is past time for employers to say they have had enough and to take control of the situation. Here is an opportunity for the brightest minds in America, business owners not politicians, journalist and pseudo soft scientist,  to solve this problem.

I propose we form an American Association of Self Funded Plans. By joining together we will have the unity to stand up to providers and government with a very simple but proven platform. All members upon joining pledge to do the following;

On January 1, 2014 our plans will reimburse Medicare +/- X% or Cost Plus X%.

On January 1, 2014 our Drug formulary will consist solely of generic medications unless there is no therapeutic generic for that condition in which case a brand name will be covered.

Hospitals: you have 18 months to get your affairs in order at which time you will be seeing a substantial reduction in revenue.

Governments: you have 18 months to make sure your consumer protection laws are sufficient to protect consumers from price gouging providers.

Pharmaceutical companies: we will only reimburse the generic price of prescriptions, if a member wants a brand name drug you need to convince them of the added value. Plans are no longer going to pay 5 to 10 times as much for a tweak in time release or combination of two old pills. If a member sees value in these one offs they can pay the difference.

From our experience implementing these and similar changes we would expect participating employers to see an immediate 20-30% reduction in insurance cost. The system has been able to bully individual employers in the past, threats of collection letters to members, high price attorneys, etc. If tens of thousands of employers representing millions of members join together and do it at once, those tools of extortion will not be nearly as effective.

Together this is a problem business can easily solve.

The Power of Taxing Authority

"WASHINGTON — When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law.

 But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist"

Not a great position to be in, use a product that doesn't exist or the government will fine you. Healthcare is about to experience a similar problem, offer affordable health insurance or they will fine you.

"a high-cost health plan is defined as costing more than $10,200 for an individual or $27,500 for a family, including worker and employer contributions to flexible spending or health savings accounts."

Community rating and guarantee issue coupled with all the new benefits like "free" preventive care and unlimited lifetime maximums it is easy to see premiums reaching these points. The real kick in the teeth is having your hands tied behind your back to prevent from reaching this point. Historically employers could control cost the following ways;

1. Charge employees more to be on the plan. No longer an option, if you exceed the employees' affordable percent of income you pay a penalty.
2. Increase deductibles or co-pays; passing more out of pocket cost onto the employees. Government has set low OOP limits that can not be exceeded.
3. Cap annual or lifetime spending. No longer allowed.  

How is a plan to stay under the $10,000 limit if all management of the plan has been taken away from them? We see the government clearly has no problem penalizing business for failing to do the impossible. It's almost like they don't want businesses offering insurance.....

The only solution I have come up with is to unilaterally pay providers less, not sure if this will comply with the OOP regulations but plans might need to go to a scheduled reimbursement. They will pay X regardless of what the hospital is willing to accept and the member is liable for either finding a provider that will accept it or paying the difference.

Ignore those practicing the soft sciences

Health Care reform is quickly starting to look like global warming with all the supposedly educated individuals talking way above their knowledge base. An Insurance broker that experiences something every day for 20 years is not reliable, an economist with zero experience writing a paper that makes no logical sense on the other hand is credible. It would be amusing if there wasn't millions of people reading this crap and making decisions based on it. Here is a recent example of a fallacy I see quit a bit;

"You’re right. There is no evidence one way or the other that Obamacare caused his premium to go up 30%. So don’t go there.

You can say that your premium went up. You can say Obamacare exists. There’s no causal evidence for the latter causing the former (especially since most of the regulations haven’t taken effect yet, and insurance went up pretty much every year WITHOUT Obamacare), so don’t say there is."

A slightly more honest version of this argument is that, according to academics, ObamaCare has only increased the cost of insurance a couple percent. That may or may not be true but that is little comfort to someone's who actual premium did go up 30%. If I have to pay 30% more at renewal I don't take much comfort in knowing everyone else only had to pay a couple percent higher rates.

Just a few examples of substantial rate increases I have personally seen;

1. Student plans that doubled in rates due to lifetime maximum increases. 
2. Limited/Mini Med plans that went away or had substantial rate increases to comply with limits on maximums.
3. Small group plans that picked up sick dependents under the age of 26, this can easily increase your rates 10-40% depending how close to the rate cap they already were. 
4. Self funded groups that increased the maximum annual reimbursement on their specific policies, I have seen increases from 3-13% to go to an unlimited annual reimbursement. 

 I am sure other agents could add considerably more. The point is; it is a fact ObamaCare has increased rates over 100% for some groups/individuals and I know first hand of groups that stopped offering benefits due to the increase directly caused by ObamaCare. This doesn't include the individual market for kids it wiped out. The propogandist on the left would prefer you now know this. Which is ironic considering all of the sob stories they ran for years prior to reform about those that couldn't get or lost coverage.

Independence Day 2012

Nobody does it better:

OK boys and girls: What is macaroni?

I'm SO glad you asked.

'Macaroni products are the class of food each of which is prepared by drying formed units of dough made from semolina, durum flour, farina, flour, or any combination of two or more of these, with water and with or without one or more of the optional ingredients specified in paragraphs (a) (1) to (6), inclusive, of this section.' 

At first I laughed.  But a bad case of seriousness set as it dawned on me this is not a joke.

It's actually part of the United States Code of Federal Regulations (21 CFR 139.110 - Macaroni Products).  This means federal regulators actually drafted, debated, and finalized this Reg; it means there is some federal law, somewhere, that the regulators cite as the "authority" to issue this regulation in the first place; and of course it means that the time required for the bureaucracy to perfect this regulatory gem was paid for with our taxes.

OK, admiral, but why is this relevant here?

Only to suggest that we will experience the same kind of mind-boggling and intrusive minutiae when the federales have written the regs under the Affordable Care Act.  

But the PPACA regs will have a truly serious impact on us all.  They will define the conditions under which we as citizens will be permitted to seek medical care, and will direct our physicians in the types of medical care we will be permitted to actually, you know, receive.   Until the end of time.

I can barely contain my enthusiasm. 

Stop asking questions and pay your tax...

...or penalty. The left seems to have gotten their panties twisted being accused of the largest tax increase in history. I had a short but spirited debate with Austin Frakt here.

Austin referenced Kevin Drum who referenced Josh Marshall who just made the claim with no reference to who he is arguing with, moment of silence for the poor straw-men, they are the real victims in all this. I linked to Forbes which clearly included the cost of premium:

"And if both the premium and the penalty are considered a tax, the mandate becomes the largest tax increase in U.S. history. And that doesn’t include all of the other taxes imposed by the legislation."

When Frakt/Drum/Marshall dismiss this claim they leave out the part which specifically includes premiums. When challenged on this Frakt says to look it up, so I did, third from the top was Rush; one of the early and widely heard places so lets see what they say:

"OBAMA: No, no. B-b-but George y-y-y-you can't just make up that language and decide that that's called a tax increase.

STEPHANOPOULOS: I don't think I'm making it up. Merriam-Webster Dictionary: "Tax: A charge, usually of money, imposed by authority --

OBAMA: (snickering)

STEPHANOPOULOS: -- on persons or property for public purposes.

OBAMA: George, the fact that you looked up Miriam's dictionary (sic), the definition of tax increase indicates to me that you're stretching a little bit right now. Otherwise you wouldn'ta gone to the dictionary to check on the definition! I mean --"

Maybe the rest of us non-ivy educated normal folks need to look words up now and then but we know if it cost us like a tax, is forced on us by government like a tax,  and the IRS is making sure we pay it, then its a tax.

Everyone needs to pay close attention to the level of distortion coming from the White House and those that support this mess. If the bill is so bad you need to lie this blatantly to cover for it we have problems.