Insurance Rebates total $1.3 Billion this summer

Today the Washington Post reported on a significant milestone in the Accountable Care Act:

Insurance rebates totalling $1.3 billion could be on the way this summer, study says

Almost word for word a direct quote from a Kaiser Family Foundation release - Insurer Rebates under the Medical Loss Ratio: 2012 Estimates, what little "value add" the Post brought to the news was a quote from Robert Laszewski, "a health-care industry consultant and former insurance executive":

" .. rather than sacrificing profits, many insurers have cut administrative costs in ways that could ultimately be passed on to customers.

Perhaps most importantly, he said, the rule does not address the main driver of insurance premiums: Health-care costs continue to grow faster than wages and the rest of the economy.

“This rule doesn’t make health insurance any more affordable,” he said.

Mr. Laszewski's comments serve to obfuscate the intent of the rule by pointing at other issues that are not material to the matter at hand here. I'm disappointed in the Post for giving him a platform to distract people from the real issues that this rule attempts to address.  
 
Yes, healthcare trend is the major issue in the industry. Healthcare reform has many approaches to address trend, ranging from ACOs to Health Records, all designed to both improve the quality of care the average american receives, as well as reduce the cost of that care. 
 
However this rule doesn't attempt to address that issue - it's designed to ensure that when you buy a product, you're getting value for it. 

It's somewhat telling that the industry standard term for the percent of your premium dollar spent on delivering benefits to you is called the Medical LOSS ratio. In case you missed it this is the percent of the money you pay an insurance company that you actually will get back in the form of healthcare. Everything else goes to marketing, sales, administration and, yes PROFITS. 
 
The industry is complaining that they need to spend 80% of the monies YOU pay them to ensure you have access to quality care when you need it on YOU. In California the regulators define benefits designs as "illusory" if MLRs fall below a certain level, and will require plans to change or remove from market the plan. 
 
One state that has struggled with this is Texas, where many plans are down around 50 - 60% MLR. Interestingly their legislature recently shifted the market transition dates for this minimum MLR process. Their rationale? Some insurance companies would struggle in compliance by the target dates, and would have to withdraw from the state, leading to fewer options for consumers. 

Really. 

I have to laugh at this self-serving rationale. If this were the food industry this would be the equivalence of saying too many companies struggle with keeping e coli out of their product, so hey, consumer, in the interests of giving you diversity of choice, we're going to keep products on the market that make you sick or kill you. The irony is staggering. So the state of Texas is going to continue to allow insurance companies to essentially steal money from consumers because they can't figure out how not to steal from them? Give me some of that business. It's no surprise that if you look at the state breakdown of anticipated payments, Texas accounts for more than 25% of all anticipated paybacks. 
 
So let's not confuse different regulations striving for different outcomes. Focusing on the efficiency of the Insurance process is an important step in driving both accountability to insurers, as well as the efficiency of your buying power. It's good consumer protection. Attempting to distract the public from this outcome is both disingenuous as well as self serving. The Post should understand this, Mr.Laszewski certainly does

The $50 Lesson

There's a new meme stalking the internet - an edgy story about how good old Republican values trump New Deal values:


The $50 Lesson

Recently, while I was working in the flower beds in the front yard, my neighbors stopped to chat as they returned home from walking their dog.

During our friendly conversation, I asked their 12 year old daughter what she wanted to be when she grows up. She said she wanted to be President some day.

Both of her parents - liberal Democrats - were standing there, so I asked her, "If you were President what would be the first thing you would do?"

She replied, "I'd give food and houses to all the homeless people."

Her parents beamed with pride!

"Wow...what a worthy goal!" I said. "But you don't have to wait until you're President to do that!" I told her.

"What do you mean?" she replied.

So I told her, "You can come over to my house and mow the lawn, pull weeds, and trim my hedge, and I'll pay you $50. Then you can go over to the grocery store where the homeless guy hangs out, and you can give him the $50 to use toward food and a new house."

She thought that over for a few seconds, then she looked me straight in the eye and asked, "Why doesn't the homeless guy come over and do the work, and you can just pay him the $50?"

I said, "Welcome to the Republican Party."

Her parents aren't speaking to me.


And the author leaves it there, smugly letting the world know that, unlike these pie in the sky socialist liberals, good old Puritan ethics and Republican "work for your own living, I don't owe you anything" ethics rule...


Well ..  As Paul Harvey used to say "And Now for the Rest of the Story"

...

Well the little girl took me up on my offer, and went to get the homeless guy over at the supermarket. She was so excited at the prospect of helping out the homeless she could barely wait.

She returned 20 minutes later with not one, but 5 men in tow - you see with what the bank foreclosures and jobs losses caused by the Banks excesses and government bailouts of big companies to the tune of trillions of dollars, they had not only lost their homes, but their jobs as much of our local economy had turned to dust.

The five men immediately set to work, and 15 minutes later, their work completed, thanked me for my $50. It was late and the day and they disappeared to where ever it is homeless people disappear to at night.  You know, as long as it's not around me, I don't much mind it.

Well, do you believe it, the very next day they showed up with the little girl again asking for more work - you see I was the first person who had offered them a job in weeks, turns out they'd been looking,  and they were eager to do more.

I had to turn them away, but suggested they check with my neighbors to see if they needed some help.

I watched them the rest of the day looking for good honest work up and down the block. Between the 5 of them they found one other homeowner that needed help who paid them $25 (that's $5 apiece!)  to clear out her back yard of a pile of rubble, mend her aged fence and paint it, and mow her front lawn.

At the end of the day the little girl came back to me and asked:

"Where are the jobs for these homeless men who are so ready and able to work?"

I told her that it was a matter of supply and demand, that she'd learn about these things when she got older.

She looked at me with her big eyes and said

"Thanks, I knew I couldn't be a Republican - your ideas don't solve real people's problems," and went home to her Liberal Democratic parents.

The moral of the story is that it's easy to make judgements and stereotype people from the comfort of your lounge chair after a day's hard work you have as a result of the good college education you could afford because your parents had money and access, but it's hard work, taking really compassionate people who are willing to look beyond kitschy sayings and simplistic pablum and employ compassion, to see how we can solve these things.

And don't bring my daughter into this - they actually know better.  I know.  I raised them to care about their fellow man.

Law for the Protection of American Way of Life and American Honor

Based on the anti-immigration trends we've seen in Arizona, Georgia, Alabama etc, the below represents the first bit of legislation I anticipate coming out of a Republican controlled Congress next year:

                One Hundred Twelfth Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Wednesday, the fifth day of January, two thousand and thirteen

House Resolution 1, introduced by Eric A. Crawford, R, Arizona

Law for the Protection of American Way of Life and American Honor


February 22, 2013

Thoroughly convinced by the knowledge that the purity of American blood is essential for the further existence of the American people and animated by the inflexible will to safe-guard the American nation for the entire future, the Congress of the United States has resolved upon the following law, which is promulgated herewith:

SECTION 1

1. Marriages between Foreign Nationals and nationals of American birth and blood are forbidden. Marriages concluded in defiance of this law are void, even if, for the purpose of evading this law, they are concluded abroad.

2. Proceedings for annulment may be initiated only by the Attorney General of the United States.

SECTION 2

Relations outside marriage between Foreign Nationals and nationals for American or kindred blood are forbidden.

SECTION 3

Foreign Nationals will not be permitted to employ female nationals of American or kindred blood in their households.

SECTION 4

1. Foreign Nationals are forbidden to hoist the American and national flag and to present the colors of the United States.
2. On the other hand they are permitted to present their own, foreign colors. The exercise of this authority is protected by the
State.

SECTION 5

1. A person who acts contrary to the prohibition of section 1 will be punished with hard labor.
2. A person who acts contrary to the prohibition of section 2 will be punished with imprisonment or with hard labor.
3. A person who acts contrary to the provisions of section 3 or 4 will be punished with imprisonment up to a year and with a fine or with one of these penalties.

SECTION 6

The Secretary of the Interior in agreement with the Secretary of Homeland Security will issue the legal and administrative regulations, which are required for the implementation and supplementation of this law.

SECTION 7

The law will become effective on the day after the promulgation, section 3 however only on 1 January 2014.

Class Warfare at its Ugliest

From  Class Warfare: Eric Cantor Reveals Republican Plan To Tax The Poor And Middle Class (VIDEO)

" Despite their pledge to Grover Norquist to never again raise taxes, Republicans have decided that their promise only applies to the wealthy and corporations. During a breakfast event on Thursday, Eric Cantor suggested to ABC’s Jon Karl that Republicans intend to punish the poor and middle class even more by squeezing more income taxes out of them so they can pay for tax cuts for the wealthy.

CANTOR: We also know that over 45 percent of the people in this country don’t pay income taxes at all, and we have to question whether that’s fair. And should we broaden the base in a way that we can lower the rates for everybody that pays taxes.

KARL: Just wondering, what do you do about that? Are you saying we need to have a tax increase on the 45 percent who right now pay no federal income tax?

CANTOR: I’m saying that, just in a macro way of looking at it, you’ve got to discuss that issue. How do you deal with a shrinking pie and number of people and entities that support the operations of government, and how do you go about continuing to milk them more, if that’s what some want to do, but preserve their ability to provide the growth engine? I’ve never believed that you go raise taxes on those that have been successful that are paying in, taking away from them, so that you just hand out and give to someone else. "

Cantor Shows Support For Raising Taxes On The Poorest Americans

Wow.  


Joseph Stigliz got it right in Globalism and its Discontents (hard to argue with a Nobel Prize Winner now) - We've spent the past 40 to 50 years engineering the greatest redistribution of wealth in history, from the working and middle classes to the rich.  And now that they're safely in the clouds with all their wealth and power, it's time to pull the ladder up so no one can follow.


Hence, with wealth and income inequality at its greatest since the Gilded Age, and the relatively few (albeit millions of them, but out of a base of 310 millions the numbers are staggering) safely secured against the financial and economic turbulence their policies and actions have created, it is now time to go for the end game and recreate feudalism in the land.


It's not just enraging, it's pathetic.  These so called patriots have created a Welfare Capitalist State (remember "too big to fail?") where banks and major corporations are bailed out to the tune of Trillions of Dollars, yet the displaced workers are now asked to pay for these so called Captains' of Enterprise mistakes once again.


This is class warfare at its ugliest.  Not the so-called class warfare the Republicans accuse the Democrats of when they propose additional taxes on the rich, this is real class warfare where the incredibly privileged have the unmitigated gall to accuse those from whom they've appropriated the wealth and potential of the land of being shirkers.


My only question is when will the sheep look up, and the barricades and Madam Guillotine return to the streets.  Those in power rarely relinquish their ill gotten gains peacefully.

Science, Faith and Public Opinion at work in America

The New York Times published an article today: 

Many Link Weather Extremes to Climate Change.  

Take a look see before going further ...


Wow. So much contained in one article. So a few comments:

1st - This shows how gullible Americans really are. They should know as the Oil and Gas companies have shown us, that there is no such thing as global warming. No no, doesn't exist. 

Therefore extreme weather has only one logical explanation. 

Wrath of God. 


Yes, if you've experienced extreme weather it's because God is judging you as worthy of excoriation and a plague. You better mend your ways or this will get worse for you. Not me, 'cause I'm god fearing and they won't touch me like that... (Waiting for the earthquake now)



2nd - It's great that, like with other matters of national and scientific importance we're relying on public opinion polls to determine facts. 


This is what makes Creationism a guiding force in Tennessee, and Evolution the guiding principle in California, New York, and, well, pretty much everywhere where there are educated human beings. 


Local scientific truths determined by the meandering and mostly uninformed belief systems of the teaming masses is what drives the universe. 

That's why in Indiana, where a State Legislator tried to declare pi equal to three in 1897, wagon wheels momentarily turned triangular, loosing their nice and useful roundness much to the consternations of merchants trying to get their products to market.

(A modern day attempt at the same effect)

Lastly - I'm glad to see the Neil Gaiman's "American Gods" principles are alive and well in the area of real science here in the US. 


It's got to be a far more interesting world where public opinion can determine scientific fact, and define the behavior of everything around us. 


All you need is a bazillion dollars to throw at issues like the Koch brothers to sway public opinion and you can redefine the basic physics of the universe. 


Now when will we get people to believe in FTL travel so we can get the hell away from them?


And if that wasn't enough for one day, a friend of mine shared this video clip of Arizona state Senator Sylvia Allen (R) voicing her support for opening up uranium mining in the state. Sen Allen responds to statements by environmentalists by assuring them that the "Earth is 6,000 years old..." and you have nothing to worry ...

Arizona State Senator Sylvia Allen (R) says Earth is 6,000 years old.

I'll have to put Arizona on my list of theologically inspired alternative realities out there. 


I'm sure the dinosaur tracks my daughters and I followed in the desert outside Tuba city were put there, what, 5,500 years ago and changed to solid rock in a "poof" of god's miracles,  Oh, and the petrified forest we meandered through on a warm April afternoon we created out of, well, nothing, 3,500 years ago and turned to rock by an evil witch.  And the Grand Canyon in all its glory was manufactured by God in place on day three, 6,000 years ago:


Genesis



" ⁹ And God said, “Let the water under the sky be gathered to one place, and let dry ground appear.” And it was so. ¹⁰ God called the dry ground “land,” and the gathered waters he called “seas.” And God saw that it was good. "

Here's to parallel Universes existing on this self same plane right next door.

And you never knew!

The Real Unemployment Statistics, or what the government doesn’t want you to know about the economy

What I’m going to say here will seem to go against everything you’ve heard in the media and from the government for the past several years on the state of the economy.  If you actually read through this you’re either going to dismiss it as foolish and misinformed, or, I hope, search out my references and confirm for yourself what I’ve been tracking for years, but haven’t bothered to write about until now.

Fair warning, this is probably going to be one of my driest posts yet.   If you read on you will be subjected to graphs, charts and data and other material that will seem like it came from that ECON201 class you hated so much in college.  I’ll try to keep it to graphs, and pictures rather than tables of data so this is a little more entertaining, but bear with me.  This is tedious stuff that only an economist or someone suffering from sleep deprivation and insomnia would look at.  And I think that’s why, when you read my findings, the government thinks they can get away with this.

For those of you who don't want to read the entire post, here's the punchline

Executive Summary

Since May 2009 the BLS has consistently and significantly understated the true U-3 unemployment by at least 3% versus what it should be, this gap has increased by about 1% since about September 2010 to almost 4% and appears to be increasing.

Employment Improves Dramatically! 

Economy on its way to recovery

Much has been made of the improvement in state of employment over the past several months.  Headlines reporting the dip in unemployment have driven up the markets, Democrats have patted each other on the back for turning the tide, Republicans have gnashed their teeth, wondering if the economy will continue to turn for the better prior to fall elections.  But has it really?  This is a tremendously important issue because, these data (the Unemployment 3 or U3 report issued by Bureau of Labor Statistics) is the benchmark whereby the government policy makers, Congress, markets and industry gauge the health and prospects of the economy. 

Friday (February 17^th) the financial markets (Dow Jones Industrial Average (DJIA)) closed close to a bellwether mark – 13,000, up 2,400 points in the last 4 months, returning to levels last seen before the 2008 crash.  (The LA Times: Dow nears psychological milestone: 13,000)

A major driver of this enormous gain has been euphoria over the unemployment situation.   But what if unemployment gains have really been more modest that reported?  What would the markets have done?  And more importantly , what will happen once they discover their mistake? 

On a personal note, can your 401(k) take another hit like it did in 2008?  Hmmm.  Let’s take a closer look

Labor Statistics, or (yawn) I forgot my homework at home professor

Using “seasonally adjusted data,” the Bureau of Labor Statistics (BLS) tracks and reports on labor statistics.  It’s the primary source of labor information for government policy makers, economists, investors, and political wonks who want to twist information to say whatever their preconceived notions (be they left or right) tell them they should say.

On February 3, 2012 the BLS reported that:

 “Nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent. Job growth was widespread, with large gains in professional and business services, leisure and hospitality, and manufacturing.  Government employment changed little over the month.”

 http://www.bls.gov/news.release/pdf/empsit.pdf

An impressive result, bringing unemployment down to its lowest level since it peaked in October 2009 at 10.0%, and yet still 3% higher than when President Obama took office in January 2008 (5.0%).  Or was it?

To understand this we need to do a little math and follow how the BLS calculates unemployment.  The data I’ll be using for this discussion are the “seasonally adjusted data” which are the data the BLS uses for its reports.  Basically they look at labor force seasonality (say lots of temporary employment around Christmas as retailers hire temporary workers to work the shops and then cut them after, in the summer, when agriculture employs migrant, oops, I meant to say temporary laborers to harvest the field and so forth) and adjust (read “tweak”) the numbers to avoid noisy fluctuations in the numbers. 

While the impact is of making this seasonal adjustment is significant, these are the numbers they use, and the numbers the market reacts to.  For example in January 2008 the seasonally adjusted population was 154,075,000 and the unadjusted population 152,858,000, or a  .8% increase in the denominator of the unemployment calculation (but I get ahead of myself).

So, on to understanding what the numbers tell us.

Total Population

The BLS defines the Total Population as “the sum of employed and unemployed persons. The labor force participation rate is the labor force as a percent of the civilian noninstitutional population.”  Hmmm.  What does that mean?  Well, they remove from consideration people living outside the country,  disabled, or either too young or too old to work.

In February 2012, the BLS reported the Total Population as 242,269,000, which means that about 70 million Americans are not part of the BLS statistics.  This is the first interesting place the data start to unravel.  As the economy worsens, people’s retirement programs disappear, costs increase beyond Social Security payments, increasingly the elderly are returning to work.  So you have to question any methodology that unilaterally excludes the aged from the base population.

Working Population

This is, well, what it says.  The BLS defines Percent of Population working as those individuals who are “active in the labor market”.  These are people who are either working full-time jobs, part-time jobs, or out of work and actively seeking employment with certain exclusions including workers who have just given up looking for a job (disaffected labor).  (We’ll speak more on this later on)  The BLS defines Working Population as the civilian, noninstitutional population, excluding military, and those incarcerated or otherwise institutionalized.    (See my footnote at the end of this entry about incarceration in the United States, and its impact on Labor Statistics.)  For February 2012 the BLS reported the Seasonally Adjusted Working Population of 154,395,000.

Working Population Percentage

This is used to report what is essentially the percent of the civilian workforce that is working or actively seeking employment.  It’s calculated as

Working Population (Seasonally Adjusted) / Total Population

For January 2012 the Seasonally Adjusted Working Population Percentage was 63.73% (154,395,000 / 242,269,000).

Whoa, this is a little much

Let’s stop here for a second and take a breather.  Let’s look at what these two numbers look like over the last ten years based on BLS data (for all the graphs and figures see the BLS website where you can download the source data and play with it to your hearts content.)

In January 2002 the BLS reported the Total Population as 216,506,000 and the seasonally adjusted Working Population as 143,883,000.  Let’s us this as the starting point (set both to 0) and look at how they grew or shrank over the last decade:

Here we can see that the Total Working Population grew by about 25 Million in the last decade, while the Seasonally Adjusted Workforce grew by about 10 Million, basically leveling off in the summer of 2007, about a year before the market crash of 2008.  Hmmm.  What’s up with that?  Have we had a massive egress from the US?  Are there 15 Million more people in the military or in prison?  No.  This means that a large number of normally employable people have permanently left the workforce. 

Let’s look a little closer.

Let’s say (for lack of a better starting point) that January 2002 represents the “normal” full participation in the workforce.  What would that be? 

Working Population (Seasonally Adjusted) / Total Population =

                        143,883,000 / 216,506,000 = 66.46%

So basically, all other things being equal, there hasn’t been a tremendous change in the total number of people that COULD be working.  Sound like a reasonable assumption?  OK, then let’s look at what the above graph would look like of we kept the workforce at that rate.

If you follow the purple line in the chart above, then you can see that about 6.6 million people have left the active workforce in the last 10 years.  Wow.  Let’s put this in perspective .

How is unemployment calculated?

This calculation is relatively simple.  BLS defines the U-3 rate (people with full time jobs) as one minus the seasonally adjusted number of people employed divided by the seasonally adjusted working population.   (Note – I won’t address the other factors of a weak labor market this the government reports as U-4 through U-6 as this topic has been addressed extensively by places such as the Economic Policy Institute.

So for January 2012 a the BLS reported:

(1 – (141,637,000 / 154,395,000)) = 1 - .9174 = 8.26%, which they report as 8.3%.

What’s the impact of all those people who “left the workforce?”

Well, these are people, who would normally be working, yet somehow have been excluded from the numbers.  To consider them, you’d have to add them back into the denominator (the working population).  What would that do?  In January 2012 the impact of this factor is about 6,609,000, which would increase the working population to 161,004,000. 

So what’s the unemployment rate if we incorporate these 6 Million people back into the equation?

              (1 – (141,637,000 / 161,004,000) = 1 - .8797 = 12.03%.

Holy Crap!  Unemployment (U-3) is really about 4% higher than the government is reporting it!

Let’s look at how this trends over time versus reported unemployment once again setting January 2002 to zero:

Key Takeaway 

Here you can see that since May 2009 the BLS has consistently and significantly understated the true U-3 unemployment (the red line) by at least 3% versus what it should be (the blue line), and that the gap is between these two calculations has  increased by about 1% since about September 2010 and appears to be increasing.

Wow.

What I have to ask is why is no one reporting on this?  Neither the liberals or the conservatives seem to have picked up on it. 

I’m not surprised you don’t hear about this in the mainstream media – hey, it’s hard work to explain this, even harder to understand.  It took me about 2 hours to analyze the BLS data and create the graphs you’re looking at and another 4 hours to write this.  But you’d think that policy makers or Wall Street traders or bankers would be seeing this and screaming bloody blue murder.

But they’re not.

Hmmm.  Perhaps that’s a topic for another day, but I grow weary and you’ve probably lost interest.

If you made it this far, congratulations!

Until next time – If you’re not pissed off, then you haven’t been paying attention.

Incarceration in the United States, an aside

 In 2009 (the latest date for which data are available from the Bureau of  Justice Statistics), there were 2,284,900 prisoners in federal prisons and state jails. 

Source: http://bjs.ojp.usdoj.gov/content/pub/pdf/cpus09.pdf

The US Census estimate for 2009 was 305,529,237 (US News and World Report), which puts the US incarceration rate at about 0.75%  For 2011, provided the rate remained constant, this would have meant about 2.3 million Americans would have been in prison or jail.  To put this in context, the US has about 4 times the average global rate of incarceration, putting us at the highest rate in the world.  (See The National Council on Crime and Delinquency)

Once again We’re Number One! Go USA.