Today is Thursday, July 02, 2009


Jeff Goldsmith offers good overview of health care reform debate, economics and politics

This is for people who have the time to read a long, thoughtful article and about 44 comments on the article.

Jeff Goldsmith has been a health care industry guru since he published his first article in the Harvard Business Review in the late 1970s.

Obama lie: ‘Expensive care is not better care’

President Obama is using the big lie to convince voters that when his government HMO, otherwise known as the “public option,“ begins cutting their access to high-cost procedures and drugs, they’ll be better off.

Yesterday, he told a town hall meeting populated with his supporters and supporters of nationalized health care insurance:

“The biggest thing we can do to hold down costs is to change the incentives of a health care system that automatically equates expensive care with better care,“ the president said. He said the formula system drives up costs “but doesn’t make you better.“

Yes, like when a doctor tells a patient with bone on bone knees that won’t let her walk to take a few Tylenol™ instead of having her knees replaced for a few thousand bucks. Or when a Kaiser HMO doctor tells a 60-year-old guy that he should wait until he’s 65 and covered by Medicare instead of Kaiser to have his knees replaced. Knee and hip replacements get patients up and walking in six to eight weeks, allowing them to resume their normal, productive lives. Tylenol™ doesn’t make painful bone on bone knees better. Under ObamaCare, if you’re in your 70s or 80s and have comorbidities, you won’t get a new hip or knee. You’ll be told to “live with it” and to “tough it out.“

Or when an obese patient is facing a lifetime of depression, diabetes and unemployment, and a doctor advises the genetically impaired, virtually immobile patient to “eat right” and “get more exercise” instead of undergoing bariatric surgery. The latter gives a patient a new lease on life, often ends diabetes and makes the patient more confident in dealing with the world and in seeking employment. Dieting and exercise are free cures. Bariatric surgery costs thousands and provides a huge return on investment.

Maybe it’s better to get more exercise, diet and eat more fish than to take prescription fish oil pills and other expensive remedies such as Lipitor™, but then you’ll die earlier, saving insurers and Medicare a lot of money. I guess that’s what Obama wants.

Under Obama’s government HMO, if you need a bypass operation when you’re 79, you may not get it. It’ll be “better for you” to die painfully and slowly. You can take comfort in knowing that you’re reducing the federal budget deficit by foregoing life-saving surgery.

WalMart gives new life to ObamaCare’s public option; you’ll hate your new HMO

WalMart (WMT) today joined the Service Employees International Union in backing a new law that would force all employers to subsidize their employees’ health insurance.

In reaction, watch the millions of employers that don’t offer health insurance to their workers come out in favor of President Obama’s public option health plan.

This could kill most private health insurers.

Look for the prices of health insurers to plunge. Health insurers have seen their stock prices soar since March because the ObamaCare public option looked like dead meat. Now, all bets are off.

ObamaCare’s public option will take all employers off the hook for providing health insurance subsidies to their workers.

And ObamaCare’s public option will imprison all Americans under 65 who don’t qualify for Medicare or Medicaid in a government HMO health insurance plan that will be more restrictive, politicized and costly than any private health insurance plan available today.

For after employers dump their workers into the government HMO, the country’s 1,000-plus private insurers will lose so many enrollees that many of them will go out of business.

This will leave Congress the freedom to blackmail provider groups such as chiropractors for campaign contributions in return for new legislation that will mandate that the government HMO insure the services provided by chiropractors, dentists and all kinds of alternative care providers.

The new mandated benefits will drive up the cost of the government HMO’s health insurance by 20% to 30% just as the some 1,000 health care benefits mandates imposed by the states inflate the cost of private health insurance now.

But when Congress raises the government HMO’s premiums and taxes to pay for the newly mandated benefits, there won’t be any private insurers around to keep the politicians or the government HMO “honest.“

Only public pressure to keep costs down will check the rush to costly new mandated benefits.

And who thinks workers and patients will be able to put more pressure on Congress than the lobbyists for the special interests who want the benefits?  Understand, mandated benefits are pushed by providers’ lobbyists, because it’s easier to run a health care practice if the government pays you regularly than if you have to collect from individual patients.

The fix is in.

My prediction is that instead of putting its competitors in a bind by having the government make them provide health insurance to their workers, WalMart has set the stage for a taxpayer-supported government HMO that will worry more about containing utilization and its costs than about making WalMart’s employes healthy enough to return to work.

You’ll hate your new government HMO 10 times as much as you hated the HMOs that made your life miserable in the 1990s until consumer and political backlashes made them allow patients better access to care.

And WalMart no longer will be able to use its fairly attractive health benefits to recruit workers at low wages. They’ll need better wages to pay higher taxes and live with increased inflation. And most would rather work somewhere else.

Instead of putting its competitors and unions in a corner with its endorsement of mandated employer-paid health insurance, WalMart has ensured that its customers will be paying higher taxes and buying less of it’s stuff.

Meanwhile, sell health insurers short. Come to think of it, WalMart doesn’t look like a very good investment, either.

Rasmussen: 37% say Massachusett’s universal health insurance is a failure; 26% call it a success

One reason that Congress appears to be backing off creating a public option health insurance plan that would compete with private health insurers is that the Massachusetts universal plan that has been touted as a model for the public option isn’t working out as expected..

In a new Rasmussen poll, 37% of Massachusetts voters called the state’s universal health insurance scheme a failure, compared with 26% who called it a success. 37% of respondents to the poll said they aren’t sure whether the plan is a success or failure.

53% of the state’s voters say they haven’t seen any change in the quality of health care, 29% say it has gotten worse and 10% say it has gotten better.

Similarly, 44% of the state’s voters say they’ve seen no change in the affordability of health care, 27% say health care has become less affordable and 21% say health care is more affordable.

As has been widely reported, the state has had to cut benefits because of the unexpectedly high cost of the plan. A veto-proof state legislature made the plan more costly over the objections of Mitt Romney who was governor when the plan was enacted in 2006.

Rasmussen reports that 50% of American voters “at least somewhat” favor the Democrats’ health insurance plan that is making its way through Congress, and 45% oppose. The poll found, however, that 24% strongly favor the plan while 34% are strongly opposed, according to Rasmussen.

So far, it isn’t clear what the Democrats’ plan is because several are under consideration.

Links:

Access-to-care problems are resurfacing in Mass. American Medical News.

Bad Massachusetts health care plan in bad trouble. OpenmediaBoston.org.

Massachusetts health care: A model not to copy: Phyllis Schlafly

Insurers and employers cannot change our lifestyles or make us exercise

A Wharton professor of risk management, Scott E. Harrington,  writes in today’s Wall Street Journal that health insurers should be allowed to cherry pick healthy enrollees and should be encouraged to give their enrollees financial incentives to eat right and exercise.

Nonsense. Harrington’s attack on community rating and advocacy of medical risk rating of individuals parrots the health insurance industry’s party line, and he’s just wrong. The literature on preventive and wellness care is coming around to the point I’ve been making for years. That is, other than prenatal care and some screening for cancer and heart disease, most preventive doesn’t work, and it doesn’t contain health care costs or expenditures.

Financial incentives in the form of lower premiums for healthy people can’t change lifestyles. Even bariatric surgery, which makes the stomach smaller and initially helps people lose a lot of weight, can’t change a person’s eating habits. You have to be born with the right genes and luck to be a person who eats right and loves exercise.

If you’ve had or know someone who’s had bariatric surgery in the last seven or eight years, you know that financial incentives don’t change behavior and that many overweight people are obese because of their genes. You also know that while bariatric surgery is beneficial, over time, the benefits wane and weight returns. Surgery doesn’t change eating and lifestyle habits for many people. I happen to know a bunch of people who’ve gone through this, although I haven’t.

The idea that employers or insurers can design benefits that change lifestyles is simply absurd. Yes, initially, people will respond to an employer’s wellness program, but sooner or later, they fall off the wagon.

What drives people to healthy lifestyles is their desire to be healthy and live longer, more functional lives. Those are strong motives, but almost everyone falls off the wagon many times over their lifetimes, and no good intentions or financial incentives will change that.

What the professor, who apparently is good with numbers but knows little about lifestyles or human nature, is missing is that lifestyles are beyond the grasp of employers and insurers. Their incentives are too remote to have an effect.

I strongly oppose the public option and Kennedy’s HMO-style cost containment barriers to access to care.

But I do believe that community rating, which is what Harrington is writing about, makes a lot of sense. The young pay more while they’re young and healthy and less than they otherwise would when they’re older and less healthy. These would be easy reforms to implement along with mandates that everyone buy insurance in the individual markets, not in the group markets.

HIgher taxes on sugar, corn syrup and other fatteners would cause the makers of foodstuffs and soft drinks to use healthier ingredients, but slightly higher prices probably wouldn’t dampen consumer demand much. And the sugar and corn lobbies won’t let it happen anyway.

More important, fix our education system so that people learn to make better financial and lifestyle decisions. You have to get kids to like exercise and healthy lifestyles very early in life, but you can’t do that when schools sell kiddies banana cream pies and other fattening foods.

Wellpoint (WLP) held down by health care reform uncertainties

Wellpoint Health Networks Inc. (WLP) is looking like a buy to Barron’s, Morningstar and some technical analysts despite the stock’s sharp runup since early March. Options traders seem to be more bearish on WLP.

Better pricing in the health insurance markets and the increasing odds that Congress won’t create a Medicare for all, or public option health plan that would compete with Wellpoint are all very bullish.

But, and this is a big “but,“ there still is uncertainty about what kind of health insurance market changes will get through Congress this year or anytime soon.

While the betting in Washington is that the public option is dead on arrival, the feeling seems to be that there is about a 50% chance that some kind of changes in the health insurance markets will be enacted before the end of the year. That’s the top priority of President Obama and Congressional leaders.

While the highly flawed and biased New York Times/NBC and Washington Post/ABC polls show that most insured Americans are happy with their health insurance and health care costs, those polls also show that voters are worried about what health care reform would do to their health care costs, quality and access. And they’re very worried that the reforms would sharply increase the federal budget deficit.

This means, of course, that Congressional reformers face huge obstacles and that health insurers like Wellpoint have less to fear from Congress than they did a few months ago.

Wellpoint bottomed out last March at $27.50, down from a 52-week high of $57.88. It recovered to about $52 before correcting to $51.34 as of Friday’s close. Its bullish charts are here. Note that WLP has met its point and figure chart price objective of $51 a share. Wellpoint’s key statistics are here.

In the June 29, 2009, Barron’s, Johanna Bennett likes the stock because its forward PE ratio is 8.31 compared with a projected 10.5% annual growth rate, which gives WLP a PEG ratio (PE/projected growth rate) of 0.94. That looks cheap if you believe the growth rate projections, which are highly uncertain. Barron’s says Wellpoint’s profits are “poised to outgrow the Street’s expectations.“ We’ll see.

Morningstar gives WLP its top 5-star rating. It says WLP’s fair value estimate is $95 and says consider buying the stock as long as it’s under $66.50 and selling it when it tops $133. It gives its fair value estimate a medium uncertainty rating.

Morningstar’s Matthew Coffina is bullish on the stock because he sees better pricing and margins despite rising unemployment. He thinks Wellpoint and its competitors are too smart to get into a price war because it wouldn’t attract many new enrollees or improve profits. If health insurers can avert a price war, it would be one of the few times they did that during a major recession.

As mentioned in an earlier post, Coffina’s article on the implications of possible changes in health insurance laws and regulations is one of the most comprehensive I’ve been able to find.

Wellpoint, its competitors and exchange traded funds that track health and heath care stocks all look very promising.

The big questions are, what will rising unemployment do to health insurers’ bottom lines and stocks, and what kind of positive and negative surprises does Congress have in store for speculators in health care and health insurers’ stocks?

Also note that while Wellpoint has been buying back shares, which inflates its earnings per share, it has not paid dividends. It’s usually a mistake for companies to buy back shares because they usually pay to much for those shares, but any shares WLP bought since March probably were cheap.

One way to get a feel for WLP’s stock price outlook is to check what options traders think of the stock. The WLP January 2010 $50 strike calls are priced at $7 bid a share. This means that bullish options traders think the stock will top $57 by next January.

WLP January 2010 $50 strike puts are $5.70 bid, which means bearish options traders think the stock will be below $44.30 by next January. The put to call ratio is a bearish 2.81. It shows more options traders are buying puts than calls. However, if you’re a contrarian, the ratio of puts to call trades is bullish because it shows too much pessimism.

The options market seems to be saying WLP is moderately risky. In a buy/write, or covered call trade of WLP Aug $50 strike calls, the annualized return over 54 days if the stock tops $50 when the August call option expires will be about 52.66%. If the stock closes below the $50 strike price and isn’t called, the annualized return will be a still nice 35.02%. Covered call trade returns on less risky stocks can be as low as 1% to 15% annualized.

In a covered call trade, a speculator buys 100 shares of a stock and sells one call contract for 100 shares.  In effect, the immediate 7.79% return on the trade gives you a hedge, or cushion, on the stock. A call option gives the buyer the right to buy a stock at the strike price, if the stock closes above the strike price. A put option gives a trader the right to sell a stock for the strike price if the stock closes below the strike price.

Charts for leading insurers and health ETFs, AET, CI, CVH, HS, HUM, UNH, WLP, XLV, IYH and VHT are here. Click on a chart to see a gallery of charts for a stock or ETF.

I don’t have positions in WLP or any of the stocks or ETFs mentioned above.

For educational purposes only. Investigate before you speculate. I am not recommending any trades and take no responsibility for how others trade stocks, ETFs, commodities or anything else.

Health care reform debate continues to intensify

The health insurance market reform debate continues to intensify as President Obama presses Congress to do something–anything.

One of the most comprehensive reviews of possible health insurance market reforms was published back in March by Morningstar: What does health care reform mean for managed care?

I first read Alain Enthoven’s book on how we could have competitive health insurance and health care markets back in the late 1970s. Last week he explained how a health insurance exchange could work in “The only public health plan we need.“ The same thing could be achieved at no cost to the government by simply requiring insurers to post their plans and rates daily on the Web.

George Will is right on in “A health care reform to regret.“

Washington Post: Deal on healthcare overhaul still uncertain. A typical pro-Obama piece with all of his inaccurate talking points, but interesting.

Ruth Marcus warns that the president’s so-called public option, or Medicare for all, may not produce the anticipated benefits in A tail wags the dog on health reform. What she and nobody else mentions is that under the public option, Congress would be free to raise premiums and reduce benefits after private insurers were driven out of business. There would be no competition for the public option, and providers would lobby for coverage of their services. The biggest campaign contributors would rule, and patients would have little say.

Washington Post/ABC poll as biased for liberals as NY Times poll

The latest Washington Post/ABC poll is as biased for liberals and Democrats as the recent New York Times/NBC poll. The NYT poll’s bias has received a lot of attention; the Post’s poll’s biases aren’t being discussed.

Both polls found substantial support for changing the nation’s health insurance markets even though most of the respondents to the polls are pretty satisfied with their insurance and health care experiences.

However, as reported below, the Post/ABC poll shows that 78% to 84% of those polled earlier this month are very worried that the health legislation going through Congress would reduce their health insurance coverage, reduce the quality of their care and limit their choices of doctors or treatments. They fear that the legislation would increase the cost of their care and that it would sharply increase the federal budget deficit.

Because politicians and pundits focus on the stories that the sponsoring newspapers and TV networks publish about their polls, not on the validity of the polls, they make bad political and policy decisions and judgments.

Here’s what’s wrong with the Post/ABC poll:

51% of respondents make less than $50,000 in total household income from all sources. This means that the fact that 60% of respondents approve of higher taxes to cover universal health insurance is distorted by respondents who pay no income taxes. People with household incomes under $50,000 pay little or no income taxes.

52% of respondents are Democrats or lean Democrat. Only 38% are Republican or lean Republican. And only 10% of the 37% who call themselves independent claim they don’t lean one way or another, which is hard to believe. This means that many of the 76% of respondents who call themselves moderate or conservative don’t vote that way. Only 22% called themselves liberals, but they vote liberal and their responses to the poll are pretty liberal.

You can say that because Obama got some 53% of the votes last year, the poll reflects the country. But McCain got 47% of the vote, not 38%, which means the poll isn’t representative of the country. And obviously, the 40% of respondents who call themselves “moderates” are more moderate liberals than moderate conservatives.

Having laid out these caveats about the Post/ABC poll, here are some of its findings on health insurance and health care reforms:

53% approve the way Obama is handling health care; 39% disapprove.
In April, 57% approved and 29% disapproved. Thus, opinion is moving against Obama, but not very much.

48% approve and 48% disapprove Obama’s handling of budget deficits, compared with 51% to 43% in the April survey.

47% think the country’s going in the right direction; 50% in the wrong direction. In April it was 50% to 48%. Again, Obama’s losing a little ground.

55% think Obama will do a better job handling health care; 27% Republicans; 11% neither.

54% favor smaller government with fewer services, 41% larger government with more services. But they didn’t vote that way.

84% of respondents have some form of health insurance, 16% don’t.

43% of all respondents are satisfied with the overall health care system in this country; 45% of those covered with health insurance are satisfied; 57% of all respondents and 54% of covered respondents are dissatisfied.

83% of all respondents are satisfied with the quality of health care; 88% of insured respondents are.

55% of all respondents are satisfied with health care costs that are and are not covered by insurance; 61% of the insured are satisfied.

Of the insured, 81% are satisfied with their coverage; 42% are very satisfied and 39% are somewhat satisfied. This is where insurers are vulnerable.

85% of all respondents are very concerned about their and their family’s health care costs in the future; 59% are very concerned and only 11% are not too concerned. This is Obama’s big talking point even though there is little chance politicians can control health care costs for very long. Price controls and rationing won’t work.

When asked how concerned they are about efforts to reform health care [insurance]:

81% are concerned that the quality of health care would be reduced;
82% are concerned that their health insurance coverage would be reduced;
84% are concerned that reforms would increase their health care costs;
78% are concerned that proposed reforms would increase bureaucracy in health care;
79% are concerned that reforms would limit their choices of doctors or treatments;  and,
84% are concerned that reforms would sharply increase the federal deficit.

Clearly, the Democrats don’t want to give Republicans to exploit these concerns, and Republicans want time to educate the public about the risks of enacting Obama’s proposed reforms, whatever they turn out to be.

38% of all respondents think health reforms are possible without changes in their coverage while 58% think changes would be required.

49% support a law that would require that all Americans either buy insurance through their employers or buy it on their own; 47% oppose.

62% support and 34% oppose a rule that requires employers to either offer health insurance to their employees or pay money into a government health insurance fund.

44% support and 52% oppose a rule that working Americans who don’t get health insurance through work or on their own would have to pay money into a government health insurance fund.

70% support and 28% oppose a tax credit or other aid to help low-income Americans pay for health insurance. (Remember, 51% of the respondents pay little or no income taxes and wouldn’t be affected by higher taxes needed to pay for this.)

68% support and 27% oppose a rule that insurance companies sell coverage to people regardless of pre-existing conditions.

What would the response have been if the question had been, Do you support requiring insurance companies to sell insurance for a $1,000 monthly payment to a patient with a $1 million illness who had not bought insurance while healthy if that insurance were required to provide coverage upon the payment of that $1,000 premium payment? In other words, do you think an insurer should be required to give a $1 million gift of coverage to someone who had not bought health insurance and helped cover other people’s illnesses?

And the followup question would be, If requiring insurers to cover pre-existing illnesses of people who have never bought health insurance would increase your monthly premium by $100 per month, would you support or oppose that rule?

62% support and 33% oppose having the government create a new health insurance plan to compete with private insurers.

Of the supporters of such a plan, 21% would want it to be run by the government and 41%by an independent organization. Not a lot of trust in government there.

Of the supporters of a government plan, 37% still would support it if it meant putting private insurers out of business while 58% would oppose the plan.

24% support taxing health benefits people got through their employer if those benefits cost more than $17,000 a year; 70% oppose the tax.

60% would support and 37% would oppose a tax on those making more than $250,000 a year to help pay for health care reform. This would affect few of the respondents’ tax bills. This response again shows that some 60% of the respondents are liberals and only 37% are fiscal conservatives.

57% support and 42% oppose a law limiting the amount of money they could get if they win a lawsuit after being injured by bad medical care.

16% think that if the health care systems [there is no system] is changed, the quality of their health care would get better; 31% say worse; 50% say it would be the same.

58% of all respondents think government reform of the health care system [insurance markets] is necessary and 39% think it would do more harm than good.  Considering how biased toward the liberals and Democrats the respondents are, that’s a remarkably high percentage who think reforms would do more harm than good.

If Republicans can stall a vote on health insurance market reforms and get the word out about how ObamaCare would increase the budget deficit and taxes and reduce the quality of care and access to care, health insurance reform legislation currently being written in Congress wouldn’t pass.

But opponents of ObamaCare remain reluctant to mount a strong attack on it.

I could have pretended to write an objective story about the Washington Post and NYT polls just as their reporters did. But my biases against ObamaCare are fully disclosed while their support of it is not fully disclosed. Their biases are just obvious.

How to buy long-term care health insurance for seniors; new regulations needed

Millions of Americans are hoping and some even are expecting to live into their 90s, but they don’t have the long-term care insurance that would make their long lives affordable and more comfortable.

Having shopped for long term care insurance, I can tell you that figuring out what’s affordable and makes economic sense is very difficult.

It is difficult to find an experienced agent to help you with the search. You need someone who represents several insurers and has been in the business for a long time, not a newby who is representing one insurer. If you have a financial advisor, ask him or her for the names of several insurance agents, but don’t use the financial advisor as a long-term care insurance agent. Few financial advisors spend enough time in the long-term care insurance markets to be experts in those markets. You need an expert. If a financial advisor claims to be an expert in long-term care insurance, I’d wonder whether that advisor was more interested in earning commissions or in helping me. It’s human nature to take care of yourself first.

Then you need to know what questions to ask, which is difficult for even those of us who know health insurance and health care and have lived with elderly parents and other elderly relatives.

In the June 26, 2009, edition of the New York Times, Walecia Konrad, the daughter of a 92-year-old man, gives some pointers on shopping for long-term care insurance. In addition to following her advice, talk to several agents. The more people you interview, the better you’ll understand your options. Don’t let the first agent you interview make the sale. Talk to half a dozen or so agents, read the policies they offer, and then decide.

Consumer Reports also has published useful articles on long-term-care insurance. You can find back issues of Consumer Reports at your library or at http://www.consumerreports.org.

Another resource may be the free subscription newsletter LTC123.com.

Many people are benefitting from long-term care insurance. And many others have been disappointed when they claimed coverage.

The long-term care insurance industry is very good at confusing and misleading its prospects and customers.

States and the federal government need to rewrite long-term care regulations to make it easy for consumers to evaluate the insurers’ offerings.

But insurers buy off state and federal legislators and even state insurance commissioners with campaign contributions.

So don’t look for the long-term care insurance market to be cleaned up anytime soon.

Sen. Baucus threatens to make hospitals dirty, unsafe, unfriendly and unavailable

Senator Max Baucus (D-MT), chairman of the Senate Finance Committee, is demanding money from hospitals and insurers so that he can pretend that his health insurance reforms will cost less than $1 trillion over 10 years.

If Baucus, President Obama and Democrats get the concessions from hospitals, look for hospitals to spend less on improving quality and outcomes, on cleaning their facilities, on training staff to treat patients as customers rather than as spoiled meat and on unprofitable “community” services.

Politico reports that Baucus thinks hospitals and insurers are dumb enough to believe that 46 million uninsured folks will become profitable customers under a nationalized health care system.

First, there are only about 6 million to 8 million uninsured people who would become new customers, not 46 million, which is an over hyped and inflated estimate from flawed studies by the highly politicized U.S. Census Bureau.

Second, the uninsured tend to be unhealthy and even chronically ill folks. It’s not clear that they would be profitable new customers for hospitals, physicians or insurers. They’d probably be unprofitable.

The Politico story concludes:

The next big deal is expected to be negotiated with hospitals. Lawmakers are looking to the industry to offer up $150 billion to $220 billion in savings, according to five health care insiders.

The deal could be a make-or-break moment for the legislation.

Hospitals are important community institutions in congressional districts nationwide, and lawmakers need their support. And since hospitals are viewed as major players in the industry, many other groups — from nurses to medical device manufacturers — will feel the ripple effects.

“Whenever they feel pain, we feel pain,” said a health industry source.

Call your member of Congress. The Democrats are intent on destroying your health care. Someday you’ll need it.

AARP demands that Senate discourage research on biologic drugs

The American Association of Retired People (AARP) is demanding that the Senate version of its so-called health reform bill include provisions that will discourage pharmaceutical companies from developing new biologic drugs that are so important to AARP’s 40 million members.

While AARP is claims to represent seniors, it’s real business is selling supplemental health insurance to its members. For example, it sells Medicare drug benefits insurance for UnitedHealth Group (UNH).

Politico reports that Nora Super, AARP’s lobbyist, threatened to withhold support for a health insurance reform bill unless it includes provisions that would cut patent protections for biologic drugs developed and produced by drug makers.

Impact graphs from Politico:

At issue is the creation of a federal approval process for generic biologics, drugs such as insulin that are proteins made by living organisms. Name-brand drug makers want exclusive rights to sell biologics for 12 to 14 years before a similar generic version can be marketed. AARP is pushing for a shorter window.

“We believe strongly, along with many other consumer, business, labor, insurance, [pharmacy benefit managers], and provider groups, that a double digit exclusivity period is simply too long and therefore not acceptable. We would be explicitly negative if this is the bill the Committee reports out,“ Super wrote.

If AARP gets its way, two things are likely to happen.

First, prices of the drugs will be increased sharply while they are protected by patents. This most likely would cause insurers to deny coverage of those drugs, causing the prices to be increased even more so that drug makers could realize reasonable returns on their research and development efforts.

Second, if drug companies aren’t allowed to recover their research and development costs as demanded by AARP, venture capitalists won’t invest in the startup companies that often develop the drugs. And the big pharmaceutical companies won’t buy the startups that have developed new drugs.

As a result, AARP’s members will be denied the benefits of research and development, and their premiums probably won’t be lowered by AARP’s misguided efforts to reduce those premiums.

Price controls like those effectively demanded by AARP always distort markets. They force useful products off the market and keep new ones from coming to market. They always fail.

 

How to buy health insurance

Shopping for health insurance probably is more difficult than buying a car or a house because you have to be very good at finding a reliable agent, comparing plans and reading the fine print, which can be a challenge for lawyers.

About 202 million Americans have private health insurance. By 2010 about 20 million people will buy health insurance through insurance agents and insurers rather than through their employers. In 2007, according to the Census Bureau, 177.4 million people were covered by employment-based insurance. Please note that Census Bureau figures are very questionable, but these are the best figures I can find at the moment.

In the June 24, 2009, edition of The Wall Street Journal, Anna Wilde Mathews’ article, Going it alone when buying a health policy, explains how to research the health insurance markets.

Since you may spend $5,000 to $20,000 a year, or $25,000 to $100,000 over five years, on health insurance, it pays to learn how to play the health insurance markets. Nobody will look after you, your family and your money as carefully as you will, especially if you know what you’re doing.

Simply put, the first step is to read her article and the some 55 comments on the article. (Paid subscription required, and it’s worth it if you’re about to spend $10,000 to $20,000 for a year’s worth of health insurance.)

The second step is to talk to, say, half a dozen insurance agents. Get names of agents and brokers from friends. The more agents you visit with, the more you’ll learn about the agents and about your options. Look for an agent who represents several insurers and works for you as well as for commissions. Those commissions range from 3% to 20%, Mathews reports. So, be careful.

Mathews recommends that you talk to agents who specialize in health insurance, not new agents nor agents who also sell property and casualty or life insurance. Understanding and keeping up with health insurance is a full time job.

Third, visit online insurance sites and brokers. Web-based brokers suggested by Mathews include:

http://www.eHealthInsurance.com
http://www.HealthPlanOne.com
http://www.HealthInsurance.com
http://www.InsureMonkey.com

Other resources include:

http://www.healthinsuranceinfo.net
http://www.familiesusa.org
http://www.healthcarecoach.com

Impact graphs from Mathews:

Some consumers choose plans based solely on online research. But without guidance, it can be tough to fully understand the nuances of a plan and how it compares to other options. First, make sure you’re actually buying insurance, not some other product such as a discount card. Don’t just look at premiums. Figure in other fees you will face, such as a percentage of the cost of doctor visits. Make sure you understand the policy’s annual out-of-pocket maximum, meaning the most you might have to spend in a year, since certain charges might not count toward the total.

Also, watch out for benefit limits or exclusions. If you focus just on price, “on the back end, you’re going to get stung,” says Ida Schnipper, founder of patient-advocacy firm Health Champion LLC.

Before making a final decision to purchase a policy, closely review the full plan explanation, sometimes called the certificate of coverage or the evidence of coverage, and seek help from the Web brokerage’s agents or other experts if you don’t understand it. Insurers may let you review this document only after you tentatively choose a plan.

If buying health insurance looks like a lot of work, it is.

We’ve been buying health insurance for ourselves and employees since 1986. And despite our expertise in insurance and health care, we always depend on our health insurance broker for information and guidance. But it helps to know what questions to ask, and you can save a lot of money and grief by asking good questions.

Do your home work.

 

Another attack on inflated ‘uninsured’ numbers; most American citizens have health insurance

The Denver Post’s David Harsanyi exposes how politicians and providers are inflating the number of American citizens who don’t have health insurance. As I’ve blogged, the correct number is between 6 million and 8 million, not the hyped 46 to 50 million used by advocates for universal health insurance. George Will recentlly said 20 million are uninsured and the Congressional Budget Office recently said 31 million, but those still are inflated numbers.

Too bad Harsanyi didn’t come up with an estimate of how many are uninsured and write a hard lede that would tell the story for readers who never get beyond the third graph.

Harsanyi notes:

CBO says 45%, or 20.7 million of the Census Bureau’s inflated 46 million uninsured are uninsured for four months or less. That puts the number of uninsured at 25.3 million.

CBO estimates that 15%, or 6.9 million, of the 46 million uninsured chronically ill already are eligible for help. That puts the “uninsured” at 39.1 million.

National Bureau of Economic Research estimates 25%, or 11.5 million, to 75%, or 34 million, of the 46 million uninsured can afford health care insurance. That means 12 million to 34.5 million can’t afford health insurance, depending on assumptions about what is “affordable.“

Harsanyi notes that for many Americans, nothing we buy is “affordable.“

8.4 million uninsured Americans are making $50,000 to $74,999 a year.

9.1 million uninsured Americans are making more than $75,000 a year

Thus, 17.5 million “uninsured” Americans are making enough to afford at least basic, high deductible catastrophic health insurance, but they prefer to game the system. So that puts the number of the uninsured, including illegal immigrants, at about 28.5 million.

Links:

Number of uninsured is inflated, according to wsj.com.

From The Wall Street Journal (wsj.com):

Clouding future projections of uninsured are tricky methods of counting them today. Even though legislation won’t cover many of them, illegal immigrants are especially difficult to enumerate: Few raise their hands to be counted. Prof. Gruber estimates they make up about 13% of the uninsured today, or nearly six million people of that 45 million number.

I think this is a huge under estimate. Probably 12 million to 15 million illegal immigrants are counted as uninsured.

There are 6 million to 8 million uninsured American Citizens who can’t afford health insurance and aren’t eligible for existing programs.

Blue Cross estimates that there are 8.2 million Americans who cannot gain access to health insurance, according to Fox Business News. Watch the whole clip.

The Blue Cross report on the uninsured is here. The 8.2 million figure is several slides into the report.

With the rise in unemployment to 9.4% from 4.6% a couple of years ago, there is no question that more people are uninsured today. How many? Who knows?

Obama, Congress can’t agree on how to pay for universal health insurance

The NY Times has a good summary of the health care reform economic issues facing President Obama and Congress.

Sugar growers in Montana and corn growers are blocking “fat tax” proposals. High-tax states like New York, Illinois and California don’t want health benefits taxed. Hospitals, physicians and insurers oppose proposed Medicare cuts.

Obama wants a deficit neutral bill, according to his people, but I think he’d go for a tax and spend health care reform bill.

NY Times health insurance poll stacked with Obama supporters.

Nice to see the wonks are catching up.

Now the NYT/CBS poll’s bias is on http://www.drudgereport.com. The whole world knows.

I reported this the night the poll was published on NYtimes.com.

Scroll down a few posts.

The number of Americans without health insurance, the ‘uninsured,‘ is inflated.

The Wall Street Journal finally looks into how many American citizens actually don’t have health insurance and are permanently uninsured..

There are far fewer uninsured than politicians say there are.

There are approximately 6 million to 8 million uninsured Americans, not 47.5 million.

President Obama and Congress are trying to fix health insurance markets for 6 to 8 million folks by further distorting health care and health insurance markets for people who pay taxes and their monthly health insurance premiums. It makes no sense.

Impact graphs from wsj.com:

Institutional commodity index speculators distort wheat futures markets, Senate panel reports

Large institutional specualtors that only buy indexes tied to wheat futures contracts on the Chicago Board of Trade and other exchanges distort the futures markets so that they ruin the price-hedging effectiveness of the futures contracts for farmers and food manufactures who use the markets to hedge their price risks, according to a report issued by the U.S. Senate’s Permanent Subcommitte on Investigations. The CBOT is owned by the Chicago Mercantile Exchange (CME).

Simply put, pension funds and hedge funds that only buy and never short the futures markets have increased the cost of foodstuffs for the whole world, and similar speculation has increased the cost of energy and probably the costs of metals and other commodities.

Call this the Jim Rogers effect, because his mutual funds and book, Hot Commodities (Random House, 2004, 252 pp.), convinced the institutional investors that they could hedge against inflation buy buying commodities.

From the 174-pp. report’s executive summary:

Read NY Times panel’s discusion of ‘America’s Health Care priorities’

The Economix Blog at http://www.nytimes.com has invited health care wonks to offer six suggestions for improving the health insurance and health markets.

So far, Economix has published a pretty good cross section of ideas.

Here is how I would answer the question:

Gallup: On health care reform, Americans trust doctors, hospitals and scholars more than they should

Gallup has found that Americans think that physicians, hospitals and health policy scholars are more trustworthy advisers on health care insurance reforms than politicians and drug companies. Gallup’s findings are here.

I beg to differ.

When asked who they were confident in asking about the right thing for reforming the U.S. health care system (there is no system and we’re talking health insurance reform here), respondents expressed confidence in:

Doctors 73%; healthcare professors/researchers 62%; hospitals 61%; President Obama 58%; Democratic leaders in Congress 42%; pharmaceutical companies 35%; Republican leaders in Congress 34%.

No wonder GOP leaders aren’t getting any respect in the health insurance reform debate. They don’t know the topic and they’re lousy communicators.

All of the mentioned players in the health insurance reform debates have tremendous financial and political conflicts of interests. None should be given more credence nor trust than any of the others.

They all begin and end with their biases, which are created by their life’s experiences as well as their intellectual journeys and their financial interests and career ambitions.

Physicians want what’s best for their patients, but only after they are financially secure. They’re human. And while they are very smart and know medicine and health care politics, I’ve found that unless they leave medicine and focus on policy, business and health economics, many are quite naive and self-centered when it comes to health policy.

Health care professors and researchers tend to be more liberal than not. They focus on very narrow topics in health policy, just as physicians do in medicine. Their conflicts of interest are in the fact that they want to see the policies they advocate enacted so that they might get government jobs, speaking and consulting engagements and more fame within their specialities. Most have great intellectual integrity, but they have their conflicts of interests, biases and blind spots like everyone else.

Hospitals and pharmaceutical companies are as conflicted as anyone else that has major financial interests in health policy. The CEOs of hospitals have been campaigning for national health insurance for a couple of decades now because they want the government to pay them for caring for the uninsured. Only last week, after the Senate started talking about cutting Medicare payments to hospitals did hospitals suddenly raise alarms about Obamacare.

The financial interests of makers and distributors of pharmaceuticals, medical devices and supplies are clear.

As for President Obama and Congressional leaders, you have to begin with the understanding that none of them really know much about health care, health insurance, health care economics or even health policy. What they know is what they’ve picked up on the fly and from personal encounters with insurers and providers. After writing about health policy for 33 years, I’m still learning, and it’s easy to see the gaps in the knowledge of our political leaders.

Thus, they depend on members of Congress like Ted Kennedy (D-MA), Henry Waxman (D-CA) and Ron Wyden (D-OR) and their Republican counterparts. These are very ideological folks who’ve spent long careers debating health care and fighting for their ideas. They don’t listen to their opponents’ ideas unless they need the opponents’ votes. This year, Democrats think they can push their ideas through without support from Republicans, although the rising concerns about the costs of the Democrats’ proposals threw a scare into them last week.

So what about journalists and bloggers like me?

Some journalists have covered health policy for decades and have strong biases. I think all health care bloggers I read have strong opinions, which is why we blog.

The bottom line is that you have to learn what all the pros and cons of the many proposals are and make up your mind. Unfortunately, health policy is so complex that even those of us who try have a tough time keeping up and balancing all the risks and rewards. It’s tough to decide what the greater good is for the country as a whole, the economy and for us as patients.

Thus, it’s no wonder that only 22% of the people polled by the NY Times claimed that they are on top of the health care insurance reform debate. I’d bet it’s less than half that. We all make decisions with incomplete information, and the country is deciding about health policy with a lot less knowledge than is needed to make good decisions.

Such is politics. Indeed, that’s the way politicians and isssues advocates want people to decide. Such is democracy, but it’s better than any alternatives.

Sadly, the huge mistakes that Obama and Congress are making will be very difficult to fix, which is why the country needs a lot of time to debate and modify Obamacare, whatever it turns out to be.

Rasmussen poll: 80% oppose health coverage for illegal immigrants

Rasmussen says 80% of Americans oppose government health insurance for illegal immigrants.

10.12 million, or 22%, of the 46 million Americans identified by the Census Bureau are illegal immigrants.

Key graphs:

While most Americans support the idea of providing quality health care coverage for all Americans, they overwhelmingly oppose such a proposal if it also includes coverage for illegal immigrants. Only 20% favor a proposal for universal health care if illegal immigrants are included. Seventy percent (70%) are against such a proposal.
But, as is often the case, there’s a wide division between Mainstream America and the Political Class on this question. The Political Class is evenly divided on the question of a universal health care plan that includes coverage for illegal immigrants. Those with populist or Mainstream views are overwhelmingly opposed.
The U.S. Census Bureau estimates that up to 22% of the 46 million people in America without health insurance are illegal immigrants.

Rasmussen poll shows 44% to 43% Americans want to wait on healthcare reform

While a New York Times poll shows 72% of 895 respondents to its very flawed poll want government-run health insurance, a new Rasmussen poll shows that 44% of some 10,000 respondents want health care reform to wait until the economy improves. 43% want Congress to act on health insurance reforms now.

Some interesting graphs from Rasmussen:

One controversial issue is whether or not the final plan should include a government health insurance company to compete with private health insurance companies. Among the public, 41% say it’s a good idea and another 41% disagree.
On an issue raised by the President last week, 48% of Americans believe it’s too easy to sue doctor’s for malpractice while just 19% believe it’s too hard. Forty-four percent (44%) favor putting caps on how much juries can award for malpractice.
Other recent polling data suggests Americans have similarly mixed feeling on the health care reform plan that is emerging from Congress.
Most Americans continue to believe that quality health care should be available to all Americans, but they draw the line at including illegal immigrants under universal coverage. They also oppose forcing all Americans to have health insurance.
Earlier this month, health care fell to its lowest level of importance as a voter issue in nearly two years of tracking.

New York Times/CBS poll on healthcare reform is very biased

Before you get excited about Sunday NYT’s poll that shows that 72% of Americans want government-run health care, check out the demographics of the respondents.

48% voted for Obama and 25% for McCain. 46% make less than $50k and therefore probably don’t pay income taxes. 27% say they’re liberals and 29% conservatives (vs. 21% and, I think, 38% in the WSJ/NBC poll), but that’s not how they voted.

13% are Hispanic, but what percent of them are citizens? 19% of the total sample didn’t vote in the last election.

Cross tabs by age, income, demographics or political leanings aren’t provided. Then look at how the questions read. They are worded to show positive responses for Obamacare.

When NYT/CBS asked if insured people (82% of the sample) had been denied access to certain treatments or drugs, there is no breakout by type of plan in the cross tab. 77% of the insureds called basic medical care (undefined) affordable; 22% called it a hardship. In short, as always, the NYT/CBS poll on health reforms is strongly tilted to generate support for government-run health care.

Also, the NYT story is biased in that it doesn’t report that 68% of those surveyed are very concerned or somewhat concerned that under government-run health care their access to care would become more limited (Q 65). The story just says Americans are concerned about what would happen to their access to care if they were insured by the government.

Read the questionnaire with the story.

How Colorado’s health insurance cooperative for small businesses died; lessons for today

Health insurance buying cooperatives for employers still are under consideration even though it is clear that such cooperatives won’t work, as I blogged Monday.

This debate prompted me to search for my previous blog on health care cooperatives.

One of my first posts, if not the first, was Susan J. Alt’s testimony before the Colorado legislature in her futile attempt to save the Alliance, which was the state-sanction cooperative for small employers. She was chair woman of the Alliance. The link is here.

I also blogged on testimony against HB03-1013 by Tim Jackson, the then executive director of the Colorado chapter of the National Federation of Independent Businesse (NFIB) here.

The bottom line is that after years of nit picking away at the Alliance, lobbyists for health insurers succeeded in killing the Alliance. I sat on the Colorado Assn. of Commerce and Industry’s health insurance committee for several years. We met weekly and I learned a lot about how lobbyists and legislators work.

The work is tedious, the lobbyists are smart and have the institutional memories and the legislators barely have a clue.

In a related blog posted at the end of 2003, I noted that our firm’s experiences with health insurance were profiled by http://www.bloomberg.com. The link no longer is available. I’m glad we don’t have employes today.

This bill killed the Alliance.

Co-ops gain backing as alternative to government insurer. wsj.com.

Ted Kennedy’s killer health care reform bill would cost many times the projected $1.6 trillion

Betsey McCaughey warns in today’s Wall Street Journal that Sen. Ted Kennedy’s $1.6 trillion health care (really, health insurance) reform bill would impose the same kind of restrictive gatekeeper rules on all Americans that HMOs tried and failed to impose back in the 1990s.

Just as I’ve been warning in comments here and elsewhere for months, Obamacare will put everyone into 1990s style Medicaid HMOs that will be so restrictive that voters will revote and force the bill’ to be rewritten and virtually repealed.

In 1988, Rostenkowski and the Dems passed legislation that so angered seniors that it was repealed in the next session of Congress. The only difference here, and it’s a crucial one, is that while Bush signed the repeal, Obama might not.

However, Obama would be facing re-election and would be easy to roll by mobs in the streets.

In the late 1990s, after HMOs imposed the very restrictive gate keeper, cook book rules referenced by McCaughey, there was another consumer revolt, and Congress and the markets forced HMOs to take the rules off the books. While a few HMOs like Kaiser still ration care with gate keeper rules and denials of service, most today act pretty much like traditional insurers and just pass costs through to the third party payers, collecting their take along the way.

Today’s gimme generation who elected Obama and the Dems may think the government owes them “free” healthcare, but when they discover what it’s like to have their access to care virtually shut off and to deal with angry docs, nurses and alternative care providers, they’ll learn that free can cost you your life or the lives of loved ones.

Simply put, Kennedy’s bill would not only cost multiples of the projected $1.6 trillion, it also would be a killer bill in so many ways.

Ironically, Kennedy and the Democrat seem to have a death wish for health care reform. On Tuesday, the independent Congressional Budget Office (CBO) predicted that his bill would cost $1.6 trillion. And based that estimate on only part of the bill. Historically, it has been impossible to accurately predict the cost of expensive new health legislation. Medicare costs a 1,000 times what the people who created it in 1965 predicted. Thus, Kennedy’s bill could cost many times the projected $1.6 trillion. And this is why the Senate is going back to the drawing board. It not only has to figure out how to make health insurance reform affordable, but also how to cover more than the 13 million Kennedy’s bill would help.

Voters and members of Congress are realizing that the cost of “universal health care” far outweigh the benefits they seek.

McCaughey took apart the Clintons’ health care bill in an article in The New Republic back in 1994 and sealed its fate.

Her article in today’s WSJ coupled with the unaffordable price tag may help kill Obamacare before Obama even knows what’s in the bill.

Obama health plan imperiled. Politico.

Health care reforms will cost baby boomers, seniors and the poorly educated and uninsured

We don’t even have Obamacare yet, and Congress already is talking about cutting Medicare in ways that will cost physicians and patients. Congress is talking about cutting Medicare expenditures by a disastrous 1.5% a year and taxing employers that don’t provide health insurance to their workers, according to wsj.com.

Physicians will be paid less by Medicare, and patients will find it harder to get docs to take them as patients. In other words, Medicare patients will have less access to care.

And, just to sweeten the pot, Congress wants to penalize employers who grow or fail to automate their workers out of jobs. Talk about Europeanizing the private sector. Under the plan to tax employers that don’t provide insurance, employers will hire fewer people and pay them over time. Unemployment will soar to 15%.

In their efforts to provide health insurance to the uninsured, Democrats risk making sure that the uninsured will be permanently unemployed.

Seniors and baby boomers. Obama and the Democrats want to cut your access to doctors to make Obamacare “affordable.“

Young people: Obama and the Democrats want to put you into permanent unemployment so that they can say they know how to pay for Obamacare.

Do the Democrats have a death wish for Obamacare?

Is the ultrashort 20-year bond exchange traded fund, TBT, a good hedge against ObamaCare, inflation?

Worried about how President Obama’s proposed health insurance reform legislation will send interest rates soaring?

Many believe his health care reform, or ObamaCare, will be very inflationary along with the already enacted stimulus bill. The inflationary concerns related to proposed universal health legislation came up during an interesting and pretty balanced discussion today on Politico.com about the obstacles facing Obama’s health care legislation. The thread is pretty representative of the health care policy debates that have been going on over the last 35 years.

Among the big obstacles facing Obama’s health insurance legislation are predictions it will cost between $1 trillion and $2 trillion over the next 10 years. Opponents worry that the cost of providing insurance that will cover only a third of the uninsured, or about 16 million folks, will be inflationary. But 16 million would be double the actual number of uninsured American citizens, which is between 6 million and 8 million.

Whatever the cost, it’s expected to contribute to the inflationary spiral many are predicting Obama’s stimulus bill and other programs will cause over the next two to 10 years.

Scott Gottlieb, M.D., a resident fellow at the American Enterprise Institute, writes that investors worried about ObamaCare should “short health care” and buy the ProShares Ultrashort Lehman exchange traded fund TBT, which tracks the 20-year bond. Or, if you don’t like the risk of trading an ultrashort exchange traded fund, you could short the Vanguard long-term bond fund BLV. As interest rates rise in anticipation of inflation, bond prices shrink.

You can short health care by shorting the Vanguard Health Care Viper (VHT) exchange traded fund. But it trades less than 100,000 shares a day, which means it’s not very liquid.

Another way to short health care is to short Johnson & Johnson (JNJ), a major health care conglomerate that owns more than 100 medical device, medical supply and drug companies. I prefer to trade stocks instead of exchange traded funds, which charge small managment fees of 0.10% and higher, but it’s easier to short heavily traded ETFs, I think.

Charts for TBT, BLV, VHT and JNJ are here. Click on a chart to see a gallery of charts for a stock or ETF.

There’s one small problem with shorting BLV, VHT and JNJ. They’re all in relatively good uptrends.

The gallery of charts for the ultrashort TBT is here. When the 20-year bonds drop in price, the price of TBT goes up with interest rates.

TBT’s daily chart is turning bearish even though it’s trading well above its 50- and 200-day moving averages. The PPO oscillator has fallen below zero, which is a sell signal. The CMF chart, which tracks cash money flow into and out of a security, also is pointing south.

TBT’s weekly chart, however, still is mostly bullish despite TBT’s current correction. Although TBT is still above its 50 DMA line, the line is declining.

TBT closed today at $53.59. On its point and figure chart, TBT has a bullish price objective of $71 a share. But it’s threatening to make a bearish breakout if it falls to $52 a share.

Traders will play the charts. Longer-term fundamentalists will play the inflationary fears surrounding the health care legislation that is making its way through Congress.

For more fundamental opinions about TBT, BLV, VHT and JNJ, search those symbols at http://www.seekingalpha.com.

I don’t have positions in any of the securities discussed above.

For educational purposes only. Investigate before you speculate. I am not recommending any trades and take no responsibility for how others trade stocks, ETFs, commodities or anything else.

ObamaCare obstacles: Public distrust, deficits, $2 trillion price tag

Great discussion on Politico about obstacles to ObamaCare. Only 1/3 of so-called uninsured would be insured by ObamaCare (OC) at a cost of $2 trillion. Not worth it. Deficits make OC unaffordable. ObamaCare would reduce access to life-extending treatments for people who now have decent to good private insurance.

Do you trust the Feds to run Health care?

Like they do Medicare, Medicaid, VA health and Social Security? Nope.

Read the 7 myths about green jobs

Scholars show the seven myths about how going green would create new jobs.

The 7 myths:

Myth 1: Everyone understands what a “green job” is.

Myth 2: Creating green jobs will boost productive employment.

Myth 3: Green jobs forecasts are reliable.

Myth 4: Green jobs promote employment growth.

Myth 5: The world economy can be remade by reducing trade and relying on local production
and reduced consumption without dramatically decreasing our standard of living.

Myth 6: Government mandates are a substitute for free markets.

Myth 7: Wishing for technological progress is sufficient.

Download the report to see why these are myths. Answers are on the first four pages of the 21-page study.

Sen. Jay Rockefeller’s wage and price controls for health care services are no silver bullet

Sen. Jay Rockefeller (D-WV) has never earned an honest private sector dollar in his life, I suspect. He has been a government man since he left college, and he believes that wage and price controls are the answer to rising health care costs and expenditures.

Take it from someone who covered Nixon’s wage and price controls and lived under them in the 1970s. They don’t work. They distort markets, create shortages, promote corruption and give special interests more reasons to pay to play with members of Congress. Indeed, the good senator may just be looking for another campaign contribution.

Further, how do you measure quality and outcomes in a hands on profession like medicine? Yes, there are some processes that can be measured, but most of what goes on in the medical world involves dozens of people who inadvertently make mistakes, misdiagnose and forget things.

Nobody could create a Food and Drug Administration to control health care services quality. Heck, the FDA does a lousy job controlling the quality of drugs.

Anybody in health care who is honest will tell you that when you’re working with patients, you find they are all unique and vary in their willingness to follow doctors’ orders. Physicians, nurses and allied professionals are human. Some days they’re on their games, and others, they are as flat as an NBA team that loses a playoff game by 20 or 30 points after beating its opponent in the previous game. 

Ask Kobe Bryant, Lebron James and Dwight Howard about how hard it is to be perfect and to be up for every game. That’s what the idiots are demanding of health care providers and their patients.

Finally, evidence-based, or cook book medicine, sounds good to a McDonald’s chef. But evidence-based medicine can be applied to less than 50% of symptoms and cases. Go figure how evidence-based medicine is the silver bullet.

But I suppose we shouldn’t be surprised that a man born with a silver spoon in his mouth believes that there is a silver bullet for health care.

Why Sen. Kent Conrad’s health insurance cooperatives won’t work

Sen. Kent Conrad (D-ND) has proposed a compromise change in the health insurance markets that would put non-profit insurance cooperatives in competition with not-for-profit insurers like Blue Cross, Blue Shield and Kaiser Plans as well as several hundred investor-owned health insurers.

Since my wife, Susan Alt, CPCU, ARM and former editor of Business Insurance Magazine, was chairman of Colorado’s co-op, The Alliance, which was setup by the state to provide lower-cost health insurance to small employers, I have some opinions about Conrad’s proposal.

First, insurers, providers, large employers and politicians won’t let the co-op succeed. They’ve undercut state-level co-ops all over the country over the last 20 years or so. And they drove Colorado’s Alliance out of business several years ago. Their lobbyists are very experienced when it comes to defanging government sanctioned co-ops.

Second, what would Conrad’s non profit (really for-profit, tax-exempt) co-ops be able to do that the Blues plans couldn’t and didn’t? How would they cut costs more than Kaiser’s plans (non-profit insurers that make their docs rich)? The simple answer is that they wouldn’t survive long, and they wouldn’t make health insurance more affordable, because politicians would require them to provide incredibly expensive coverage with low co-payments and deductibles. Consumers would have no incentives to curtail health care expenditures, and the co-ops would have tremendous incentives to be the most rigid and nasty HMOs in history until shell shocked politicians put them out of business.

Links:

Trouble with Conrad’s compromise. CBS.

Jacob Hacker’s impact graphs:

Which brings us to Senator Kent Conrad, Chairman of the Senate Budget Committee, who has announced with much fanfare that he has solved the public plan problem—er, “problem.“ His solution? Allow consumers, states, and anybody else so inclined to create cooperatives that would purchase health care for their members. Conrad has not offered much in the way of specifics on what the cooperatives would look like or how they would be chartered. Most important, he has offered no reason to think that the cooperatives he envisions could do any of the crucial things that a competing public plan must do.

An easy way to think of the public plan’s functions is the three “B"s: We need a national public plan that is available on similar terms in all parts of the nation as a backup. This plan has to have the ability to improve the quality and efficiency of care to act as a benchmark for private insurance. And it has to be able to challenge provider consolidation that has driven up prices to serve as a cost-control backstop.

Cooperatives might be able to provide some backup in some parts of the nation, but they are not going to have the ability to be a cost-control backstop, much less a benchmark for private plans, because they are not going to have the reach or authority to implement innovative delivery and payment reforms. And so Conrad’s idea appears to be yet another compromised compromise that cuts the heart out the idea of public plan choice on the alter of political expediency.

That’s not to say that encouraging cooperatives would be bad policy. In fact, Conrad has resurrected an old health care idea that taps into Americans’ strong belief in direct community control (what the political scientist James Morone has called “the democratic wish.“) Cooperatives of various sorts have been discussed and sometimes created to provide health care in the past. After the Great Depression, the Farm Security Administration encouraged the development of health cooperatives—which at one point had about 600,000 members, mostly in rural areas. But the cooperatives crumbled in the face of physician resistance (including boycotts), the lack of financial wherewithal of the cooperatives themselves, and the eventual withdrawal of government support.

Even today’s remnants of the cooperative movement don’t provide the most inspiring of lessons. The only survivor of the 1940s experiment, Group Health Cooperative of Puget Sound, does continue to operate as a tightly managed health maintenance organization, paying doctors on a salaried basis. It is well regarded, and indeed, was found to be remarkably efficient by the RAND Corporation as part of a famous 1970s analysis of the effect of insurance cost-sharing. Unfortunately, it’s now little different from other nonprofit HMOs, with around a half million members in Idaho and Washington State. By contrast, WellPoint—the nation’s largest insurer and a major force behind the defeat of health care reform in another West Coast state, California—has more than 30 million members.

And that’s the story of purchasing cooperatives writ large. They have been hard to establish or extend, and when they have been established, they’ve been under constant siege from doctors and insurers and eventually largely operated as private insurance plans or weak purchasing arrangements. It is hard to see how any sort of decentralized cooperative model could do what a public plan can do.

The left doesn’t like the co-op plan. Huffington Post.

Impact graph:

“This is a big mistake,“ former Gov. Howard Dean told the Huffington Post. “These co-ops will be very weak. Many won’t have the half-million members that most experts think is necessary to influence the market… Insurance companies will be licking their lips.“

Sen. Kent Conrad and political reality. The Atlantic.

Impact graphs:

Supporters of Conrad’s proposal point out that the idea had been discussed in the meeting that Democratic Senators had with President Barack Obama earier in the week. Conrad is nonplussed about the reaction from liberal health reformers who want a robust public plan to compete with and eventually crowd out the private insurance market. Conrad’s point: that’s not possible, given the political calculus now. If you can change the political calculus, you’ll get the plan.

From the perspective of a liberal health care reformer, who’s to blame for this state of affairs? The White House. They’re not pushing back against Conrad. They’re not arguing in private for a tougher public plan. (An insurance industry executive who talks regularly to the White House lauded the administration yesterday for its honest brokerage.) The other reality Conrad confronts is that even the majority leader, Harry Reid, acknowledges that the reconciliation process for passing budget items (50 votes needed only) would take care of, at most, 75% of the reform proposal, excluding most versions of a “public plan.“  If you can’t get to 60, then you don’t have a bill. Sen. Max Baucus and Conrad are still opposed to reconciliation on principle.

Obama tries to fool doctors and other health care providers; some want to be fooled

President Obama today tried to pull the wool over the eyes of physicians, nurses, hospital executives and consumers when he spoke before the American Medical Assn. in Chicago.

He called the health care industry a “ticking time bomb” ready to explode.

This shows how little he knows about health insurance, health care and health markets, not to mention economics. It also shows he’s willing to create a crisis that he can exploit in his efforts to create a single payer health care system that would hurt all Americans who don’t belong to the political classes.

Look at the health insurance and health care industries as growth industries that make America rich by keeping Americans relatively healthy.

When Obama complains about growing expenditures on health care, he shows he’s more concerned about his welfare and power than about patients.

He’s openly promising to delay and deny care that keeps people comfortable and functional.

He’s promoting a system that would cause a physician shortage as older physicians retired more quickly than they could be replaced as their pay and freedom to practice as they saw fit were curtailed.

Physicians are too smart to buy the idea that the public option would be their friend, not their enemy. They’ve lived with the failed Medicare and Medicaid programs for their entire careers.

Only those who are in denial and want to be fooled by Obama will be.

How to reform health insurance markets

For years, a few people have been pointing out that there are only 6 to 8 million uninsured American citizens. As George Will pointed out on “This Week” Sunday, millions have not signed up for programs for which they are eligible. Millions (14.5 million to be exact) earn more than $50k a year but don’t buy insurance. Some 10 to 15 million of the so-called uninsured are not American citizens. The left’s lame reply is that “we have to pay for them anyway,“ but that’s not true.

When uninsured illegal immigrants and any other uninsured non-citizens need health care, they should be sent back to their home countries for that care. If those countries don’t provide the care, to bad.

Last week, wsj.com reported on the ineffectiveness of preventive care in terms of cutting costs per patient and saving money for the government and insurers. Same goes for most wellness care. Everyone should pay for their own preventive and wellness care or do without, just as we do with any other kind of preventive maintenance.

Health insurance premiums could be cut by huge percentages if we eliminated state and federal mandates for coverage of alternative care services that people should pay for out of their pockets. Allow insurers to sell policies that cover catastrophically expensive health care services and illnesses under community risk rating systems. Require insurers to put all of their insureds into corporate risk pools rather than into small group pools so that they really sell insurance rather than avoid risks.

Require everyone to buy catastrophic insurance in the individual markets. Take governments and employers out of the insurance business. When governments and employers buy insurance, they buy what’s most cost effective for themselves, not what works best for their employes. Group policies are a scam that must be eliminated.

We need a restructuring of the regulations that rule health insurance markets, not government insurance. Regulated markets would ensure choices for providers, insurers and, most important the insured. They would promote quality and a level playing field for everyone.

When politicians run health insurance programs, they look out for themselves first with little regard to the needs of anyone else. They distort markets, deny and delay care and make millions of sick people more miserable than they ever should be. Politicians in Canada, the U.K and in most other countries with “universal coverage” make dying even more painful and cause millions to become unproductive and chronically ill long before they should be.

As another guest on “This Week” pointed out, in the U.S., health care payment reforms imposed over the last 60 years always have failed. The only way to reform health insurance is to reduce the roles of government and employers and to make insurance buyers the most powerful players in health care.

It won’t happen.

I’ve been blogging on this for six years and writing about it for 33.

Charts for Colorado’s largest companies

It’s time to take a look at how Colorado’s largest companies are doing in the stock markets.

The ten largest are Qwest (Q), Liberty Media Holding Corp. Capital (LCAPA), EchoStar (DISH), Molson Coors (TAP), Chipolte (CMG), Prologois Trust (PLD), Western Union (WU), Ball Corp. (BLL), Crocs (CROX) and Emergency Medical (EMS). Their charts are here. Click on a chart for a gallery of charts.

The next 10 largest Colorado stocks are: Woodward Governor (WGOV), IHS Inc. (IHS), Vail Resorts (MTN), Janus (JNS), Cimarex Energy (XEC), Forest Oil (FST), Apartment Management (AIV), St. Mary Land (SM), United Dominion (UDR) and DaVita (DVA), which is moving to Colorado later this year. Their charts are here.

The next 10 largest companies are Red Robin (RRGB), Ciber Inc. (CBR), National CineMedia (NCMI),  Time Warner Telecom (TWTC), Einstein Noah Restaurant Group (BAGL), Air Methods (AIRM), Whiting Petroleum (WLL), Level Three (LVLT), Liberty Global Inc. (LBTYA) and DCT Industries (DCT). Charts are here.

The next 10 largest Colorado stocks are CSG Systems International (CSGS), Newmont Mining (NEM), Penford (PENX), Galam (GAIA), Discovery Communications (DISCA), Spectranetics (SPNC), Advanced Energy Industries (AEIS), Bill Barrett Corp. (BBG), Markwest Energy (MWE) and Dynamic Materials Corp. (BOOM). Charts are here.

Nine more stocks include: Heska (HSKA), MDC Holdings (MDC), CoBiz (COBZ), TransMontaigne (TLP), Royal Gold (RGLD), Ramtron (RMTR), HealthGrades (HGRD), Golden Star (GSS) and Berry Petroleum (BRY). Charts are here.

The next step is to review the charts for each of these stocks and try to find some worth buying.

At first glance, it’s pretty obvious that most of these companies have been riding the crest of the recent rally in stocks, as most stocks have been. The question is whether the rally will continue or is on the verge of a significant correction after three up months in a row. If the rally continues, which stocks will do best over the next few days and weeks? If not, will it make sense to own any of them?

I don’t own any of these stocks.

For educational purposes only. Investigate before you speculate. I am not recommending any trades and take no responsibility for how others trade stocks, ETFs, commodities or anything else.

Bernanke’s warning to Congress about deficits causes selling of gold

Is adult supervision coming to Washington?

Today’s markets acted like they were worried that Congress would listen to Fed Chair Ben Bernanke’s warning that budget deficits were going too high.

In effect, Bernanke was trying to reassure the markets that a surge in inflation is not around the corner because the Fed won’t let it happen, and he’s warning Congress to watch that spending.

His warning could be bad news for health care reformers, who want to add a budget-busting health insurance reform bill to the economic mix.

So gold prices, which have been on a tear recen