Look, I know there is rhetoric on both side and we all fall for the one liner, me included. We all want something done about health care, but when you learn about how this thing was put together, you will think differently about this, maybe.
I was watching C-SPAN last night and saw this very informative video from MIT professor Jonathan Gruber, who co-wrote both the Massachusetts program and the current Federal bill being voted on. He was a paid participant and openly admits he is biased towards the bill, but I appreciate the honesty. What I found striking is that he openly admits that 90% of this bill is designed for coverage and only 10% is geared for cost controls. He also admits they are trying a “spaghetti approach” to controlling costs, meaning they are throwing 37 different pilot programs against the wall to “see what sticks.”
If you listen to what he is saying it is clear that the government will become the biggest premium payer to insurance companies through subsidies. The implications of this can lead to the government having the ability to start dictating what gets covered and what is not covered, in my opinion. The MA plan is the benchmark for the national plan and that should be of some concern to us all. Why? The cost of insurance did not come down with a mandate to everyone to be insured and competition never increased, there are 4 carriers in MA. Currently, according to the MA treasurer, 52% of all spending in MA is going directly to this insurance program or Medicaid, again showing that costs were not controlled. Of course, the MA bill was all about coverage and not about reducing costs, Mr. Gruber admits that.
If we look at the MA program there are problems with it, like most people have to go to community hospitals and those hospitals are only getting 60-70% of the reimbursement rate and 7 MA community hospitals are currently suing the state because they are going bankrupt. In order for everyone to get covered and for rates to not go through the roof insurers will have to pay doctors less, Mr. Gruber dances around that topic in his speech saying “surgeons used to be middle class people, but now they live in the Hamptons with investment bankers.” I have said that doctors do charge too much, $150 for a 2 minute office visit is nuts, but if private insurers have to adopt Medicare rates we will have less doctors, that is a fact.
Mr. Gruber is an economist, not a health care professional or insurance executive, which goes back to my point that no insurance person was ever involved in this process, but economists and lawyers are? I am sorry, but I do not like this approach because people often get left out of the equation in economists and lawyers models. He pointed towards the fact that doctors over test, which may be true, and that things like genetic testing is “too expensive.” He brings up some great points and says we will never have socialized or Canadian style health care in the US, I disagree with that as this bill will subsidize premiums up to, I think $80K in income.
This bill will do some great things, do not kid yourself, like the preexisting condition repeal and you cannot be dropped from coverage if you get sick, but those items could have been taken care of in straight up or down votes a year ago January. Regardless, Americans are furious over the process of what is happening and not being listened to. I want a straight up and down vote on the issue and I want to know for a fact that my Congressman read the bill, any Congress person saying this bill controls costs is not being truthful as the author tells you they are not sure this will control costs.
Mr. Gruber admits that when MA hit its financial trouble in 2008 they had to cut the program in MA. What does that mean on the Federal level where this thing is a trillion dollars? He says that by spending $950B to cover people now will save $30T over the next decade, I think he misspoke big time there as that is impossible. I also do not believe that the taxes collected over the next 4 years will not be spent, we are broke after all borrowing $200B a month remember, and the program will start in the red right off the bat in 2014. I also do not believe that the new taxes will only be on the top 5% of US taxpayers, like the AMT (alternative minimum tax) it started out on high net worth individuals and now it hits people below the $100K mark, unless Congress passes the AMT fix every year. Just like the AMT these new taxes will creep down because wealthy individuals got wealthy because they know how to avoid taxes.
CBO estimates, I hate CBO estimates, why? If you give the CBO the numbers you want to run you will get the results you want, it is that simple. They make little assumption on how these numbers will change over time, like people buying less income securities or dividend paying stocks so taxes drop or wealthy people decide to make $199,000 instead of $200K a year. They assume today’s numbers will stretch from here into infinity which is a joke. Look at Medicare projections back in the 1960’s, or the 1980’s or the 1990’s, you have to project the worst case scenario, not the best, and I can assure you that if they did that the numbers would be ugly. Basically, feed the CBO the data you want to get and bingo! Deficit reduction.
Mr. Gruber also wants to get rid of the tax break on health care premiums, the Cadillac Tax as it is called. Basically it is getting rid of the tax subsidy, or tax deduction, on plans that cost over $23K a year. This is not going to raise the money they think as most of the people with Cadillac plans are unions or a small portion of executive, a very small portion. There is no way that this tax deduction will stay at this level and plans that cost less than $23K will, eventually, lose their tax break as well, especially as the Cadillac Tax kicks in and those plans are dropped. Most of you have health insurance because, A) Your employer wants to remain competitive in the workplace; and B) Because they get a tax deduction for providing that benefit, why do you think they pay so much of the premium? You get rid of that and people will be left on their own, so it may be a good thing for employers, time will tell.
Oh, for all those who think we have the 37th worst health care in the world, think again. Over 240K people come to America to get some form of treatment and only 12,000 Americans leave for treatment abroad. Mr. Gruber explains that it is social economics is the problem, essentially, and, in his example, a black baby in Washington DC has the same chance of reaching their first birthday as a baby in Jamaica, that is horrible. However, what he says is what I have been saying, this is because we have an access problem.
He also states that we are like the Roman Empire if we do not get health care under control. The issue is that health care is one leg of the three legged problem. The other two legs are Social Security and our national debt. This bill currently only might fix health care, but based on MA it probably will not and based on what we know about our elected officials the other 2 legs are not going anywhere. However, as Mr. Gruber pointed out earlier in his speech, this bill really might not control costs at all. This bill also does not control prescription drug costs, at all, and Mr. Gruber says we must pay more so the rest of the world can pay less, unreal.
There was a better way of getting to a middle ground and trust me I want a middle ground. I just do not believe that this bill is legal, the Federal government cannot force you to buy anything, in my opinion, and I do believe that deem and pass should be banned, look what happens and I have heard enough of “well, they did it too,” two wrongs do make a right. I highly recommend watching this 1 hour 23 minute video to cut through the rhetoric. However, listen to what he says and what he kind of says. Listen to it without your own bias as you will hear some things that might not sit well with you. Sometimes what a person does not say means more than what they would actually say.
Oh, no illegal immigrants will get coverage, just an FYI.
There is good news and bad news to this mess. The good news is it is almost over and the bad news is that is it is almost over. No matter what side of the fence you are on the one thing I can assure you of is that it is going to pass tomorrow morning. Even though I can also assure you that it is a budget buster, see the Republican CBO inquiry today for proof, and you should all know by now that the CBO is garbage in, garbage out group. What I mean is that if you feed it the sequence of data you want results for you are certain to get the desired results you want.
The real unbiased results were from the actuary that submitted his results a couple weeks ago, sorry, but actuaries know insurance and are key to determining costs, risks and results. His report shows that the costs for premiums will go sky high, I guarantee that to be the case as well, I know a thing or two about insurance as well. Basically, we have lawyers writing a bill that is math intensive and that is a major mistake, for proof look at Medicare deficits, Social Security, National Flood Insurance or any other government run program. For those who think this bill will reduce health insurance premiums ask yourself this one question, how can it is they did not take out the federal anti-trust exemption for insurance companies?
Seriously, without taking out that one exemption it is next to impossible to lower insurance premiums because it restricts citizens from buying policies across state lines. That means that insurers who have a lock on some states will still have a lock on those states, give me a break. Not only that, but now these same insurers must add millions of sick people to the roles and cannot charge them higher premiums, specifically, so that means all of our premiums will go up. This bill is the greatest gift to the insurance industry ever created. The only government gift to the private industry that was better, and it was not even close, was the no bid contracts to Halliburton under Bush. If this thing passes, buy insurance companies because for the first time in history the Federal government will mandate that citizens will be forced to buy a product from private companies to the tune of a trillion dollars over the next 10 years, give or take a few billion.
Because premiums will go sky high and our brilliant elected officials are incapable of doing simple math the subsidized premiums we will have to pay will blow those sweet deficit reducing estimates right out of the water within 3 to 4 years. If the administration and Congress decided to work with the industry, people like me who are truly impartial, they could have built a real reform bill, but since they think they know everything they have just put the final nail in the coffin of the US, from a fiscal point of view. Medicare will be insolvent or eliminated much faster than currently projected and the budget deficits will be through the roof by 2016 as the new taxes make people rethink how much money they want to earn. Oh, I am also assuming that we are actually in a recovery I might add, but if we are not in a real recovery, which the housing numbers today shows that without government help we are still in trouble, then the trouble comes much earlier.
What is that you say, AARP and the AMA support this bill so it must be OK? Let me tell you something about those organizations, in my opinion, they would sell their grand kids for an extra dollar and I am not kidding. AARP had a Medicare Advantage plan that they endorsed pulled from the market because it was so bad. They endorsed the product, it got pulled from the market and I can assure you that Medicare Advantage contract was a lot shorter than 2,100 pages long so it is highly unlikely they even know what is in the health care reform bill, but they know they can profit from it somehow. They hate variable annuity contracts, but love immediate annuity contracts because they have a GA contract with NY Life. Basically, if they can profit from it they will endorse it, period.
The AMA, who knows what they see in it except that they probably think they will get a permanent Doc Fix Bill passed or they like the idea of mandatory private insurance much better than a public option. Let’s face it, $26 per office visit from Medicare must stink versus the $50 or $90 per visit from private insurance. If you combine that an additional 30M new patients, or 40M depending who you listen to or where you get your uninsured number from, that equals some major money for the AMA and its members.
Clearly, this whole bill revolves around money for everyone. Everyone who loves it is getting paid big time to endorse it or vote for it. However, you, the person who pays for everything, is not in favor of this bill according to every poll conducted. I wonder why you are not in favor of it? Maybe because you know your Congress person is receiving tons of money from special interest groups to push things through, check opensecrets.org to see, or that Bernie Sanders, a socialist, sold out for $10B, way to be a socialist, Ben Nelson sold out for less, and of course we have the Louisiana Purchase take II. However, you have to pay your taxes plus the health insurance premiums and Congress wonders why you don’t want this thing, incredible.
What I find interesting is that New York, who is on the verge of bankruptcy, should have held out against this thing. Where was Schumer and Gillibrand on this? Why didn’t they say no way on this bill and get out Medicaid paid for? It work for Ben Nelson and Bernie I am sure it would have worked for NY. Oh yeah, Chuck was busy making the media rounds and calling flight attendants “bitch” instead of doing is fiduciary responsibility to his home state. I dislike the Republicans, I mean abortion that is the best defense against this thing you can come up with, however I agree with them that this bill is the train wreck of the century. Why is China moving towards capitalism, but the US appears to be moving towards socialism?
Clearly socialism did not and does not work, but here we are. For those who want the socialist lifestyle I urge you to seek out the countries that live under those types of regimes. I admit the US has problems, nothing is perfect, but here is the thing most countries want what we have, not the other way around. We could fix health care the right way if we took our time and did things in the open, as Obama promised he would do, but that never happened. Instead we decided to use a sledge hammer to itch our nose and it is not going to end well. Unfortunately it will take 4 years for me to be proven correct.
First, let us clear something up, health care reform is totally different from the monstrosity that is currently in front of the Senate at this moment. Health care reform would mean that the government would be telling insurers that they could no longer discriminate against preexisting conditions, annual and lifetime caps would be removed and insurers would lose their federal exemption from anti-trust laws. Health care reform has nothing to do with a public option, period. The current mess in congress does reform some of those issues I mentioned, but not all of them and it creates far more damage to the system than it will solve.
Now, this is an issue near and dear to my heart as someone with cancer and who desperately needs his health coverage that I currently have. I am not the only one in this position, as I am sure you can imagine, and there are millions like me out there who are waiting to see how Congress will screw this issue up for us. Here is what I foresee happening in the near-term and how a death sentence will be issued to many people like me.
Congress will pass this budget busting, horrible health care package that will help the most destitute of Americans, who already qualify for Medicaid or similar programs I might add, and will immediately drive up the cost of existing plans to people like me who already pay through the nose for health care coverage. Once this thing passes my monthly premiums will jump from $1,200 a month to $2,000 or more a month because insurance companies will be out of business starting in 2014 when the public option, i.e. socialized health care, begins. This will make health insurance unreachable for most Americans and small businesses putting people like me at risk of dying because I will not be able to afford health insurance, the irony.
Let’s not forget that I will have a “Cadillac” plan, because that is what NY makes you have, so add another 40% tax to my premium and if I make $250K a year add another tax to my income tax, on top of my already high taxes, and how am I supposed to pay my other bills? It will make very little sense for me to put any effort into anything or to make any money at all if this thing passes. In fact the cross over point is somewhere close to about a third of what I make now so I will literally not have to work in a couple of years and I will end up netting the exact same amount of money and pay less in taxes. I am not the only one figuring this out either, so guess what will happen? All the bad people, i.e. “rich” people, will decide to make less because it is easier and less of a headache which means all those estimates the Senate is coming up with are going to be shot to hell.
The real fun will begin after 2014 when the supposed 31 million Americans, mostly illegal’s from what I can tell, will then flood the doctors’ offices. This is when the fun really begins. We will then have to get used to extremely long waits at doctors’ offices because we have more people with insurance and we will have less doctors because they will be reimbursed less, since it will probably be a Medicare like reimbursement system. Doctors will not stay in this business for the $25-$40 they get reimbursed for government health plans, would you? That means the polls showing that doctors will quite if this nationalized health care plan is approved are probably accurate or at the very least doctors will flock to specialties so you can forget about preventative care or GP doctors.
At this point in time innovation will have stopped because there are going to be taxes on biotech companies and other pharmaceutical companies, read the bill. We will have a health care system exactly like Canada or the UK which by all accounts is great, f you are not sick. If you are sick in those countries you get out and come to, guess where, America, but that will be long gone by 2015. We, Americans, will be flocking to China, India or somewhere else in South East Asia for health care because there will be no waiting, it will be cheaper, the service and survival rates will be better. For the life of me I have no idea why we, the country where other citizens flock to for medical treatment, would revert to a socialized system that is failing other countries not only in terms of their health, but also in terms of their national financial health.
If you think about it who goes to the UK or France to get cured of cancer? I didn’t I went to Boston along with many people from the UK and France. Who goes to Canada for surgery? They come here. The only people who venture to those countries are those who do not have insurance and refuse to pay for anything on their own, which I get that this is an issue, but it does not warrant the US going to socialized health care for 10% of the population. Also, the UK, France, Germany, Switzerland and any other country that offers socialized health care has a debt to GDP ratio that is horrible, worse that ours, but our actual number is that largest of all, so why would we do this at all? We can’t afford this and to think we can is absurd.
We currently owe $12.03T (TreasuryDirect.gov) which is 81% of out GDP and some $3T comes due of the $12T next year. That means we have to fund about $5T in US debt in 2010, depending on how much this wonderful government decides to spend next year, which will be a record, think about that for a minute. We have never done that before and even Moody’s is beginning to doubt the solvency of the US government and now the government wants to add socialized health care to this mess? How in the world can we pay for this? We cannot. Even the Chinese are saying, um, how are you going to pay for this? They, the Chinese, will not show up at some point in time to buy our government paper because they know we will not be able to pay off our debt.
We have yet to even raise our debt ceiling yet from the $12.1T to the $14T we need to raise it to for next year’s deficit spending. Yet our Senators will pass this monstrosity of a bill for the “greater good” of 10% of the population who already qualify for Medicaid, but are too good to apply for it! Then they will wonder why people like me end up losing their insurance next year and rates go through the roof, surely it will because of the big bad insurance company who, by the way, paid for more $10,000 procedures for me than I would care to admit to. This bill not only impacts the insurance industry, but it impacts every American in ways that you cannot imagine from your insurance coverage next year to the very solvency of the country in the next 10 years. This government needs to be stopped before they destroy this country and kill people like me.
Given the market reaction to the Fed Bailout and the current credit crisis this is why a variable annuity makes sense for equity investors. While many financial services firms are in turmoil, going bankrupt or becoming commercial banks, not to mention the market retreat – is that what we will call it? – insurance companies have done fairly well.
Yes, AIG had issues, but the insurance divisions did just fine. The Hartford accepted a cash infusion from Allianz, but that is an investment, so far at least, and that was because Hartford was concerned over a downgrade, not a failure type situation. Other than those instances the insurance industry has held up very well with limited exposure.
The guarantees offered by variable annuities may not be around forever given this whole crisis, so it may be prudent to look at them now. Living benefits offer a rich guarantee that is not like any other type of investment in the world. Yes, you will pay for it, but come on, look at the market. Would you rather pay for nothing and have huge losses or would you rather have to pay 3% a year to guarantee income for life?
It seems like an obvious choice to us, but that is your call.
The market turmoil is not going to be over for awhile. What we see happening today is what we feared for a longtime. Europe is in trouble, Congress passed the bailout package and the markets still retreat, almost 1,000 points in a week. These are indications that there is more to come. The only saving grace, if there is any, is that it showed strength at the end of the day, but it was, overall, on light volume. We expect more losses in the future though.
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