The idea of giving bonuses to the best teachers, and the teachers who work the hardest is a good one. The problem arises when you seek to determine what constitutes the "best" or "hardest working" teacher. The solution that appeals to many is simply to use student test scores as an indicator of teacher proficiency. Unfortunately, using one set of test scores doesn't give an accurate picture of what's going on in the classroom.
We all know that some teachers get to teach AP and Honors classes, other teachers get a lot of English Language Learners, some get a lot of 504 and IEP students (students with exceptional behavioral problems, disabilities, or who have special educational needs), and a few actually do get an "average cross section of the student body". This means that great care must be taken to accurately rate teacher performance, as you will often have "apples to oranges" comparisons.
Which of these teachers will have students with great test scores? Obviously, the AP and Honors students will test higher.
These also tend to be the better behaved and easier to teach students - which means that teaching them is often easier than working with struggling, or academically/behaviorally challenged students. So the teachers who get the most challenging students (who also tend to be teachers who are lower on the seniority scale, so already earn a lower base salary) would be the ones least likely to be able to earn the "merit" bonuses.
If I am a 9th grade English teacher, and have a student come to my class in the fall reading at a 3rd grade level, and leave in the spring reading at a 7th grade level, am I a great teacher for helping them make up four lost years in one year, or a crummy teacher because my student won't be at grade level next fall (when they "age" into the 10th grade)?
Unless we create a program that tracks each child individually, and use the individual improvements of students in the class (weighted for how many days the student was actually in attendance), there is no accurate way to measure how much your students have improved, or how “meritorious” a teacher you are.
The "Combat Pay" concept is much better than the "Merit Pay" concept.
This idea was for the state/federal government to step in and offer bonuses and incentives to teachers that worked at high needs schools. This would attract more (and theoretically better) candidates to those districts and schools that are underperforming.
In my local area, the lowest paying schools tend to be the “urban”, Title 1 schools that have the lowest achievement scores, as well as large numbers of (hard-working and caring) beginning teachers who aren't being given the chance to gain experience in successful school environments. It is common for teachers (those that don't leave the field in the first few years) to move to the more upper-middle class districts in the area after spending a few years clearing their credential.
I am distressed to hear that one of President Obama's plans for "improving" education is to create a program that puts brand new administrators into underperforming Title 1 schools. This is like having the new law school graduate work on the murder trial, while the firm's partners do simple boilerplate contracts, or having an intern fresh from med school do the open heart surgery, while the senior surgeon son the hospital staff deal with minor scrapes from a bicycle accident.
Monday, May 24, 2010
Monday, March 29, 2010
Different medical problems may require different solutions
One problem with the "health" care "debate" is that there are many different varieties of medical care. These include catastrophic injury/illness where there is a large, short term expense, followed by a return to fairly normal life, long term disabling conditions that require various levels of cost over various levels of time, regular and predictable costs (periodic check ups , eyeglasses, teeth cleanings, etc.), and minor injuries and illnesses (flu, sprained ankle, broken arm, strep throat, etc.). Throwing everything together into one category (except dental and optometry - which are somehow not "health related" in some people's minds) just doesn't work.
Short term catastrophic care is probably best handled by a risk pool, since anybody could get hit by an uninsured motorist (or hit and run driver), have a building collapse on them in an earthquake, or be struck by certain sudden onset severe illnesses. This is where government sponsored, provided, or mandated coverage makes the most sense. Even then, there are some cases where the problem is entirely created by the patient, who is behaving in an antisocial/illegal manner that makes the medical problem likely, and the community as a whole shouldn't be expected to pay for their treatment. For example: A drunk driver with previous DUI convictions who is injured while driving drunk, shouldn't have their medical bills covered by anybody but themselves.
Our current emergency room system partially does this, providing emergency care regardless of the patient's ability to pay. Unfortunately, ERs are often used as clinics by people who have non-emergency conditions, yet who wish to get free care.
Perhaps we need more "public" clinics where people can be seen for non-emergency conditions, with a low payment. One summer when I was a poor student in Kentucky, I had occasion to visit the County Health Clinic to have a suspected brown recluse spider bite looked at. The problem turned out to be an infected cyst, rather than a bite, and I was charged $25 for the treatment, since it was simple enough to be performed at the clinic, and my income was in a certain range (the university's health services plan couldn't take care of me because it was summer break, so I had a "gap" in coverage). This was the same clinic where I received a $10 TB test to medically qualify to work with young children.
Long term conditions present a different problem. In these cases, it becomes a matter for cost/benefit analysis - unless the supply of money for medical care is unlimited, tough choices have to be made. There are various levels of treatment, that have different costs and benefits to the patient. Some conditions may be treated surgically, others with medication, and still others with various treatments (such as radiation or physical therapy). In some cases, superhuman measures might be taken to keep the patient alive, while in others, the decision might be made to control the worst of the pain, while allowing the patient to die a natural death.
It is my belief that the best person to make these choices, in terms of benefit, is the patient, or the patient's next of kin. The best person to make these choices, in terms of costs, is the person paying the costs. If people/families are not paying their own costs (or for their own elective coverage) in these situations, then some bureaucratic board, committee, or panel will decide who gets money for care, and who gets to die. If we do not keep the costs for such care in the control of the patient, then the decisions must be made by others (i.e. "death panels").
With medical savings accounts and medical tax credits (see below), a person with a long term, but manageable condition, could pay for their own treatment (or that of a family member or friend) for an extended period of time.
A person who has smoked two packs of cigarettes a day for the past 20 years (blowing their second hand smoke into the faces of others the whole time, and ruining the smell of their environment and clothing) shouldn't expect anyone else to pay for their lung cancer treatments (except maybe the cigarette company who made the cigarettes so addictive). Again, since they are participants in a behavior that is known to significantly increase the risks of harm, the public shouldn't be expected to pay, and non-smokers should actually be getting reimbursed by the smoker for the extra costs (fire, medical, and cleaning) that are created by smokers.
Similarly, a person who uses illegal drugs should have to pay (or repay) for treatment they receive for any medical problem resulting from their illegal drug use. The same would apply for criminals who are injured or who become ill as a result of committing crimes. Felons should receive a level of care in prison infirmaries that is no greater than the level of care a homeless citizen of the same state would receive. If the felon desires better care than that minimum level, they (or their family/supporters) should pay for the additional level of care. It is absolutely immoral that convicted felons in prison often receive better medical care - at public expense - than do working Americans. Felons who are on "Death Row" should receive only minimal and palliative care, since dying from illness would save the taxpayers the cost of executing them.
Medical savings plans would be a great way to assist people to save enough to cover known, recurring, and predictable expenses. Just as we have tax exempt and tax deferred plans to help people save for retirement, or for college, we could have similar plans to help people to save to pay for routine or predictable medical expenses. These plans would have to be long term, and transferable - meaning that the money would not be "lost" if it were not used by the person placing it into the account. They should be able to use it to cover their own medical expenses, or medical expenses for a family member. They should also be able to transfer money from their medical savings account to another person's account - a friend for example, and should be able to leave their account to others after they die.
Medical savings accounts should be tax free, and employers should be able to make matching contributions - as they currently are able to do with 401k type plans.
The other thing that would make medical care more affordable would be to have tax credits/exemptions for medical care (treatment and medication). This would make it more affordable for people to seek routine care, and could ease the financial burden of high cost medical conditions.
Short term catastrophic care is probably best handled by a risk pool, since anybody could get hit by an uninsured motorist (or hit and run driver), have a building collapse on them in an earthquake, or be struck by certain sudden onset severe illnesses. This is where government sponsored, provided, or mandated coverage makes the most sense. Even then, there are some cases where the problem is entirely created by the patient, who is behaving in an antisocial/illegal manner that makes the medical problem likely, and the community as a whole shouldn't be expected to pay for their treatment. For example: A drunk driver with previous DUI convictions who is injured while driving drunk, shouldn't have their medical bills covered by anybody but themselves.
Our current emergency room system partially does this, providing emergency care regardless of the patient's ability to pay. Unfortunately, ERs are often used as clinics by people who have non-emergency conditions, yet who wish to get free care.
Perhaps we need more "public" clinics where people can be seen for non-emergency conditions, with a low payment. One summer when I was a poor student in Kentucky, I had occasion to visit the County Health Clinic to have a suspected brown recluse spider bite looked at. The problem turned out to be an infected cyst, rather than a bite, and I was charged $25 for the treatment, since it was simple enough to be performed at the clinic, and my income was in a certain range (the university's health services plan couldn't take care of me because it was summer break, so I had a "gap" in coverage). This was the same clinic where I received a $10 TB test to medically qualify to work with young children.
Long term conditions present a different problem. In these cases, it becomes a matter for cost/benefit analysis - unless the supply of money for medical care is unlimited, tough choices have to be made. There are various levels of treatment, that have different costs and benefits to the patient. Some conditions may be treated surgically, others with medication, and still others with various treatments (such as radiation or physical therapy). In some cases, superhuman measures might be taken to keep the patient alive, while in others, the decision might be made to control the worst of the pain, while allowing the patient to die a natural death.
It is my belief that the best person to make these choices, in terms of benefit, is the patient, or the patient's next of kin. The best person to make these choices, in terms of costs, is the person paying the costs. If people/families are not paying their own costs (or for their own elective coverage) in these situations, then some bureaucratic board, committee, or panel will decide who gets money for care, and who gets to die. If we do not keep the costs for such care in the control of the patient, then the decisions must be made by others (i.e. "death panels").
With medical savings accounts and medical tax credits (see below), a person with a long term, but manageable condition, could pay for their own treatment (or that of a family member or friend) for an extended period of time.
A person who has smoked two packs of cigarettes a day for the past 20 years (blowing their second hand smoke into the faces of others the whole time, and ruining the smell of their environment and clothing) shouldn't expect anyone else to pay for their lung cancer treatments (except maybe the cigarette company who made the cigarettes so addictive). Again, since they are participants in a behavior that is known to significantly increase the risks of harm, the public shouldn't be expected to pay, and non-smokers should actually be getting reimbursed by the smoker for the extra costs (fire, medical, and cleaning) that are created by smokers.
Similarly, a person who uses illegal drugs should have to pay (or repay) for treatment they receive for any medical problem resulting from their illegal drug use. The same would apply for criminals who are injured or who become ill as a result of committing crimes. Felons should receive a level of care in prison infirmaries that is no greater than the level of care a homeless citizen of the same state would receive. If the felon desires better care than that minimum level, they (or their family/supporters) should pay for the additional level of care. It is absolutely immoral that convicted felons in prison often receive better medical care - at public expense - than do working Americans. Felons who are on "Death Row" should receive only minimal and palliative care, since dying from illness would save the taxpayers the cost of executing them.
Medical savings plans would be a great way to assist people to save enough to cover known, recurring, and predictable expenses. Just as we have tax exempt and tax deferred plans to help people save for retirement, or for college, we could have similar plans to help people to save to pay for routine or predictable medical expenses. These plans would have to be long term, and transferable - meaning that the money would not be "lost" if it were not used by the person placing it into the account. They should be able to use it to cover their own medical expenses, or medical expenses for a family member. They should also be able to transfer money from their medical savings account to another person's account - a friend for example, and should be able to leave their account to others after they die.
Medical savings accounts should be tax free, and employers should be able to make matching contributions - as they currently are able to do with 401k type plans.
The other thing that would make medical care more affordable would be to have tax credits/exemptions for medical care (treatment and medication). This would make it more affordable for people to seek routine care, and could ease the financial burden of high cost medical conditions.
Thursday, March 25, 2010
Forget the uninsured, let's help the homeless!
As an exercise, let’s apply the Health Care Reform logic to home ownership. I think that we can all agree that having a place to live is as basic a “human right” as having health care.
According to HUD:
There are 3.5 million homeless people in America.
Over 32% of Americans don’t own the homes where they do live.
That’s over 96 million Americans who don’t own the homes they live in, and who could be tossed out on the street at any time. Added to the 3.5 million homeless Americans, that’s about 100 million people who need homes.
That’s 100 million Americans whose rights are being violated.
Obviously what is needed is a huge federal program to make sure that every American family unit or single adult owns their own home. This means that people with lower incomes will have homes given to them – at taxpayer expense
People who invested in real estate and already own more than one home should be forced to sell the additional homes – at rates set by the government, of course – or have them taken away and given to the needy, because there are a finite number of homes available, and nobody really needs to have more than one home. These people can’t really even complain because they will still have a home, and may even get to choose which one they retain – hey, it’s not our fault that they chose to invest in real estate, instead of investing in something else.
People who own “Mansions” will need to be assessed with a special tax, because their “Cadillac” lifestyles are more than they “need”, and unfair to others who live in smaller or more poorly located homes.
Since many young adults traditionally don’t buy homes, parents (or their employers, or the taxpayers) would be obliged to provide housing for children until the age of 26.
Anyone who doesn’t own a home will be subject to fines.
Members of the House and Senate, the President, and the Vice-President would be exempt, of course, and home taxes in Nebraska would be guaranteed to never go up.
We could even claim that the bill would be financed through savings from current HUD programs (such as housing subsidies), the elimination of the costly Fanny May and Freddie Mac programs, and by confiscating all student loan repayments in perpetuity. We could also claim that this would be a 50% increase in the property tax base – since it would be a 50% increase in the number of people paying property taxes. We would justify this by pointing out that only two thirds of Americans currently own their homes and pay property taxes on them (never mind that landlords pay property taxes, this is the kind of annoying “assertion” that will only be brought up by Fox news and other “nutcase” and “fringe” opponents of progress), so getting all Americans into their own homes would increase the property tax base by 50%.
********
Personally, I'm a guy who invested many years of my life into a military career. I never made more than $30k a year until I retired from the military, and my retirement check is less than $700 a month, but I actually chose to return to active duty in my early 30s because I weighed my options and decided that the medical benefits package made up for the fact that the salary wasn't going to be enough to buy a home or invest heavily.
I "invested" in lifelong medical care through my employer. Yes, through my employer - which just happens to be the government.
Now I see people who made other choices wanting to get the same medical benefits that I get, but to do it at taxpayer expense, without giving up 17 years of their life (and acquiring a 40% disability) in the service of our nation. They tell me that I am not losing anything, since I will keep my health care (although I may end up being taxed on my benefits, depending on how mush they decide my employer contribution is). I tell them that it is the same as if a housing program allowed them to continue to stay in their home, and continue to pay their mortgage, while the government gave me the house across the street for free - they aren't losing anything, except when they look at what they pay for something that someone else is getting free.
If it's going to be government subsidized healthcare for all, then I think I am owed a different compensation package for my military career - say about five times the salary/retirement. I'm not holding my breath though, because Congress and the President don't care about fairness or equity for vets.
According to HUD:
There are 3.5 million homeless people in America.
Over 32% of Americans don’t own the homes where they do live.
That’s over 96 million Americans who don’t own the homes they live in, and who could be tossed out on the street at any time. Added to the 3.5 million homeless Americans, that’s about 100 million people who need homes.
That’s 100 million Americans whose rights are being violated.
Obviously what is needed is a huge federal program to make sure that every American family unit or single adult owns their own home. This means that people with lower incomes will have homes given to them – at taxpayer expense
People who invested in real estate and already own more than one home should be forced to sell the additional homes – at rates set by the government, of course – or have them taken away and given to the needy, because there are a finite number of homes available, and nobody really needs to have more than one home. These people can’t really even complain because they will still have a home, and may even get to choose which one they retain – hey, it’s not our fault that they chose to invest in real estate, instead of investing in something else.
People who own “Mansions” will need to be assessed with a special tax, because their “Cadillac” lifestyles are more than they “need”, and unfair to others who live in smaller or more poorly located homes.
Since many young adults traditionally don’t buy homes, parents (or their employers, or the taxpayers) would be obliged to provide housing for children until the age of 26.
Anyone who doesn’t own a home will be subject to fines.
Members of the House and Senate, the President, and the Vice-President would be exempt, of course, and home taxes in Nebraska would be guaranteed to never go up.
We could even claim that the bill would be financed through savings from current HUD programs (such as housing subsidies), the elimination of the costly Fanny May and Freddie Mac programs, and by confiscating all student loan repayments in perpetuity. We could also claim that this would be a 50% increase in the property tax base – since it would be a 50% increase in the number of people paying property taxes. We would justify this by pointing out that only two thirds of Americans currently own their homes and pay property taxes on them (never mind that landlords pay property taxes, this is the kind of annoying “assertion” that will only be brought up by Fox news and other “nutcase” and “fringe” opponents of progress), so getting all Americans into their own homes would increase the property tax base by 50%.
********
Personally, I'm a guy who invested many years of my life into a military career. I never made more than $30k a year until I retired from the military, and my retirement check is less than $700 a month, but I actually chose to return to active duty in my early 30s because I weighed my options and decided that the medical benefits package made up for the fact that the salary wasn't going to be enough to buy a home or invest heavily.
I "invested" in lifelong medical care through my employer. Yes, through my employer - which just happens to be the government.
Now I see people who made other choices wanting to get the same medical benefits that I get, but to do it at taxpayer expense, without giving up 17 years of their life (and acquiring a 40% disability) in the service of our nation. They tell me that I am not losing anything, since I will keep my health care (although I may end up being taxed on my benefits, depending on how mush they decide my employer contribution is). I tell them that it is the same as if a housing program allowed them to continue to stay in their home, and continue to pay their mortgage, while the government gave me the house across the street for free - they aren't losing anything, except when they look at what they pay for something that someone else is getting free.
If it's going to be government subsidized healthcare for all, then I think I am owed a different compensation package for my military career - say about five times the salary/retirement. I'm not holding my breath though, because Congress and the President don't care about fairness or equity for vets.
Thursday, August 13, 2009
Eight ways Obama wants to kill competition in health insurance
Eight ways Obama’s proposed reforms will drive up costs for consumers and drive private insurance companies out of business *
1. Ends Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.
For you: This means that there will be no economic benefits to those who make healthy life choices. Non-smoker? You’ll pay just as much for insurance as that three pack a day chimney.
For your insurance company: This means that insurance companies will be required to take on bad risks.
2. Ends Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.
For you: No co-pays, or fewer/lower co-pays. This means that policy holders will have less encouragement to limit trips to the Doctor’s office. It will also mean that high volume visitors (like hypochondriacs) will get a fee ride at your expense.
This also means that you will have fewer options, and those options left to you will be the lowest cost options. For example: Instead of allowing you to have brand name medications if you pay the difference from generics, brand names won’t be an option.
For your insurance company: This means that premiums will have to go up, or services will have to be cut. Responsible policyholders will have to pay more to cover their less responsible counterparts.
3. Ends Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.
This is not a medical insurance issue, it is more of an HMO or budgetary issue. This is akin to requiring car insurance companies to pay for all vehicle maintenance, rather than just repairs after accidents.
Regular checkups somehow don’t sound like the thing we keep hearing about from those who claim we need health care reform – the unexpected medical emergency that bankrupts a family.
Again, costs will go up, and it will force all medical insurance companies to also become HMOs.
4. Ends Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.
Does this mean that if you are ill, and can no longer pay your premiums, your coverage must be continued? Sounds like a bad business model.
5. Ends Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.
This contradicts the whole point of things like actuarial tables. I guess that we can also require that car insurance companies can’t use gender in their rate calculations either.
Fact: Men get in more car accidents. Women go to the Doctor more often.
Corresponding fact: Men pay more for car insurance. Women pay more for HMOs and medical insurance.
Is this gender discrimination, or simply having the business model match the facts?
Men’s insurance costs will increase. Women’s may come down (but don't count on it).
6. Ends Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.
Caps on coverage allow companies to balance risk and offer lower cost policies. This will increase policy costs – just as having a smaller deductible on your car insurance, or insuring a more expensive car will increase your car insurance premiums.
7. Extends Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.
This makes no sense at all, since any adult will supposedly be eligible for care under their own plan, their employer’s plan, or the “public option”. This actually seems like it is a subsidy for upper middle class and wealthy families who tend to send their children to college and grad school straight after high school.
This means that an adult child will have to be covered for nine years after their 18th birthday, since coverage won't end until their 27th birthday, adding 50% to the time that children are covered by their parent's policies, and forcing an increase in costs to the policyholder.
8. Guarantees Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.
This will increase costs as the insurance companies will not be able to cut their losses with policyholders who end up using up more money than they pay in. This has also sometimes been described as not allowing insurance companies to raise insurance rates.
What these eight things do is to guarantee that private insurance companies will either have to dramatically raise their rates, or they will lose money and eventually be bankrupted and driven out of the health insurance business.
Even if they raise rates, that means that fewer people will be able to afford the insurance, reducing profitability, and making this a bad business model.
* The eight policy statements (in bold) are courtesy of Mr. David Axelrod, writing in an Official White House email on August 13th, on behalf of President Obama. The responses are my own.
1. Ends Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.
For you: This means that there will be no economic benefits to those who make healthy life choices. Non-smoker? You’ll pay just as much for insurance as that three pack a day chimney.
For your insurance company: This means that insurance companies will be required to take on bad risks.
2. Ends Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.
For you: No co-pays, or fewer/lower co-pays. This means that policy holders will have less encouragement to limit trips to the Doctor’s office. It will also mean that high volume visitors (like hypochondriacs) will get a fee ride at your expense.
This also means that you will have fewer options, and those options left to you will be the lowest cost options. For example: Instead of allowing you to have brand name medications if you pay the difference from generics, brand names won’t be an option.
For your insurance company: This means that premiums will have to go up, or services will have to be cut. Responsible policyholders will have to pay more to cover their less responsible counterparts.
3. Ends Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.
This is not a medical insurance issue, it is more of an HMO or budgetary issue. This is akin to requiring car insurance companies to pay for all vehicle maintenance, rather than just repairs after accidents.
Regular checkups somehow don’t sound like the thing we keep hearing about from those who claim we need health care reform – the unexpected medical emergency that bankrupts a family.
Again, costs will go up, and it will force all medical insurance companies to also become HMOs.
4. Ends Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.
Does this mean that if you are ill, and can no longer pay your premiums, your coverage must be continued? Sounds like a bad business model.
5. Ends Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.
This contradicts the whole point of things like actuarial tables. I guess that we can also require that car insurance companies can’t use gender in their rate calculations either.
Fact: Men get in more car accidents. Women go to the Doctor more often.
Corresponding fact: Men pay more for car insurance. Women pay more for HMOs and medical insurance.
Is this gender discrimination, or simply having the business model match the facts?
Men’s insurance costs will increase. Women’s may come down (but don't count on it).
6. Ends Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.
Caps on coverage allow companies to balance risk and offer lower cost policies. This will increase policy costs – just as having a smaller deductible on your car insurance, or insuring a more expensive car will increase your car insurance premiums.
7. Extends Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.
This makes no sense at all, since any adult will supposedly be eligible for care under their own plan, their employer’s plan, or the “public option”. This actually seems like it is a subsidy for upper middle class and wealthy families who tend to send their children to college and grad school straight after high school.
This means that an adult child will have to be covered for nine years after their 18th birthday, since coverage won't end until their 27th birthday, adding 50% to the time that children are covered by their parent's policies, and forcing an increase in costs to the policyholder.
8. Guarantees Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.
This will increase costs as the insurance companies will not be able to cut their losses with policyholders who end up using up more money than they pay in. This has also sometimes been described as not allowing insurance companies to raise insurance rates.
What these eight things do is to guarantee that private insurance companies will either have to dramatically raise their rates, or they will lose money and eventually be bankrupted and driven out of the health insurance business.
Even if they raise rates, that means that fewer people will be able to afford the insurance, reducing profitability, and making this a bad business model.
* The eight policy statements (in bold) are courtesy of Mr. David Axelrod, writing in an Official White House email on August 13th, on behalf of President Obama. The responses are my own.
Monday, July 20, 2009
Health insurance is not the same as health care
The President is warning that if we don't pass his health care plan this year, it will be a disaster for Americans. He acts like there won't be time to make any changes next year, and that we must rush a bill through - probably without having a chance to read it and study the impact on the economic environment and the repercussions for health care for Americans.
Why can't we take this slow and make sure we do it right? Why do we have to rush it through before the American people know what they are actually buying for the trillions of dollars that it will cost us?
Obamacare has some odd proponents - including the insurance industry, who are supporting the idea of universal health insurance, as long as there isn't a government insurance program that will use taxpayer subsidies to drive them out of business. They have no problem with taxpayer subsidies - as long as they are getting what they consider to be "their fair share".
My question is this: if we are attempting to fix the problems of our health care system, why pursue an insurance based health care policy?
One problem with insurance is that it ends as soon as you can't pay the premiums any more, or as soon as your employer stops paying the premiums.
This means that while you are healthy and working, you have coverage, but when you are unhealthy and not able to work, you are not able to pay premiums, so have no coverage. This is what makes it profitable for insurance companies - when you most need the service, you aren't eligible.
This is true of private insurance, employer provided insurance, and even government provided insurance - when there is no longer enough money coming in, the insurer will cut benefits.
Another problem is that if you are paying the insurance company, you are not paying for health care, but for a promise of health care.
It reminds me of the Seinfeld episode where Jerry tries to pick up a rental car and is told that, while the company has his reservation, they have no car for him. Just as Jerry argues "It doesn't matter if you can TAKE my reservation. What matters is that you can KEEP my reservation.", I say "It doesn't matter if you have health insurance. What matters is if you can get health care." - the insurance is a promise to provide care when it is needed, if the insurer finds it possible. Health care is exactly what it says it is.
A further problem with insurance is that it disconnects the health care provider and patient from the decision making process. Health care providers often feel pressured to plan treatment based on what insurance companies are willing to reimburse them for. Patients don't have as much of a reason to weigh the costs and benefits of various options against each other.
In many cases, there are various choices within the broad categories of surgery, medication, therapy, lifestyle adjustment, palliatives, and non-traditional treatments that are ignored because the health care provider can't be reimbursed by the insurance company for them, and the patient only asks about options that are covered by their insurance plan.
This disconnect creates a system where patients and health care providers are not discussing options, and not making their own decisions. Often, this leads to higher costs as we find that one size doesn't fit all.
If the government wants to involve itself in health care, and use taxpayer subsidies to provide a more "socially just" access to care, I see tax exempt health savings plans as a far better option, along with tax credits for health care expenses.
Health savings plans are a great idea, but one that many people might decide not to invest in, because we don't like to think about bad things happening to us. If there were a health savings plan set up similar to a 401k plan, where employers could match contributions as a benefit to attract employees, that would probably work better, but it still wouldn't convince everyone to save up for a possible health emergency. Effective health savings plans need to be tax exempt (with penalties for withdrawing them for non-health expenses), lifelong, and transferable to your heirs. I have seen health savings plans where the money just evaporates at the end of the year - they are fine for saving up for a planned procedure or regular medical cost, but not very useful in the long run.
The larger end of the equation would be medical expense tax credits. These would go a long way to ensuring that an accident or unexpected illness wouldn't wipe out a family's ability to survive. Of course such tax credits would have to be regulated, as we could easily see people getting more money in tax returns via these tax credits than they would pay in taxes, or even earn in a year of working. There would seem to be a need to restrict the number of years a person could claim medical tax credits in excess of their withheld taxes. Perhaps once every seven years, as we restrict bankruptcy?
Whatever is done, the first two steps are to:
1) cut any free or subsidized care for those who are in our country illegally
and
2) restrict the limit of care provided free to felons in prison to the lowest level of care available free to law-abiding citizens.
Why can't we take this slow and make sure we do it right? Why do we have to rush it through before the American people know what they are actually buying for the trillions of dollars that it will cost us?
Obamacare has some odd proponents - including the insurance industry, who are supporting the idea of universal health insurance, as long as there isn't a government insurance program that will use taxpayer subsidies to drive them out of business. They have no problem with taxpayer subsidies - as long as they are getting what they consider to be "their fair share".
My question is this: if we are attempting to fix the problems of our health care system, why pursue an insurance based health care policy?
One problem with insurance is that it ends as soon as you can't pay the premiums any more, or as soon as your employer stops paying the premiums.
This means that while you are healthy and working, you have coverage, but when you are unhealthy and not able to work, you are not able to pay premiums, so have no coverage. This is what makes it profitable for insurance companies - when you most need the service, you aren't eligible.
This is true of private insurance, employer provided insurance, and even government provided insurance - when there is no longer enough money coming in, the insurer will cut benefits.
Another problem is that if you are paying the insurance company, you are not paying for health care, but for a promise of health care.
It reminds me of the Seinfeld episode where Jerry tries to pick up a rental car and is told that, while the company has his reservation, they have no car for him. Just as Jerry argues "It doesn't matter if you can TAKE my reservation. What matters is that you can KEEP my reservation.", I say "It doesn't matter if you have health insurance. What matters is if you can get health care." - the insurance is a promise to provide care when it is needed, if the insurer finds it possible. Health care is exactly what it says it is.
A further problem with insurance is that it disconnects the health care provider and patient from the decision making process. Health care providers often feel pressured to plan treatment based on what insurance companies are willing to reimburse them for. Patients don't have as much of a reason to weigh the costs and benefits of various options against each other.
In many cases, there are various choices within the broad categories of surgery, medication, therapy, lifestyle adjustment, palliatives, and non-traditional treatments that are ignored because the health care provider can't be reimbursed by the insurance company for them, and the patient only asks about options that are covered by their insurance plan.
This disconnect creates a system where patients and health care providers are not discussing options, and not making their own decisions. Often, this leads to higher costs as we find that one size doesn't fit all.
If the government wants to involve itself in health care, and use taxpayer subsidies to provide a more "socially just" access to care, I see tax exempt health savings plans as a far better option, along with tax credits for health care expenses.
Health savings plans are a great idea, but one that many people might decide not to invest in, because we don't like to think about bad things happening to us. If there were a health savings plan set up similar to a 401k plan, where employers could match contributions as a benefit to attract employees, that would probably work better, but it still wouldn't convince everyone to save up for a possible health emergency. Effective health savings plans need to be tax exempt (with penalties for withdrawing them for non-health expenses), lifelong, and transferable to your heirs. I have seen health savings plans where the money just evaporates at the end of the year - they are fine for saving up for a planned procedure or regular medical cost, but not very useful in the long run.
The larger end of the equation would be medical expense tax credits. These would go a long way to ensuring that an accident or unexpected illness wouldn't wipe out a family's ability to survive. Of course such tax credits would have to be regulated, as we could easily see people getting more money in tax returns via these tax credits than they would pay in taxes, or even earn in a year of working. There would seem to be a need to restrict the number of years a person could claim medical tax credits in excess of their withheld taxes. Perhaps once every seven years, as we restrict bankruptcy?
Whatever is done, the first two steps are to:
1) cut any free or subsidized care for those who are in our country illegally
and
2) restrict the limit of care provided free to felons in prison to the lowest level of care available free to law-abiding citizens.
Thursday, April 16, 2009
An open letter to Congressman Pete Hoekstra
Mr. Hoekstra,
I commend you for calling DHS Secretary Napolitano on her department's obviously politically biased report about right wing "extremists".
At a time when we see so little action or leadership from Republicans in Washington, it is refreshing to see you standing up for veterans and conservatives.
Can we take the next step, and start proceedings to remove Ms Napolitano, and replace her with someone who is qualified and ready to do the job?
It is obvious that she is not a good fit for the job of Secretary of Homeland Security if she is going to conduct partisan witch-hunts that categorize conservatives as threats based on their beliefs or their status as veterans of the U.S. Armed Forces - yet recognizes that it is extreme actions and threats, not ideas that are a danger when speaking of the left. This kind of blatant partisan double standard is not acceptable from a public employee. Why should only liberals have their ideas protected by the First Amendment? Do conservatives have no civil rights in Obamerica?
Also, if Ms Napolitano thinks that people are terrorists if they are opposed to illegal immigration, she needs to be tested for drug use, because she is out of touch with reality. The Department of Homeland Security should be actively seeking to secure the borders so that illegal immigrants (and the dugs, diseases, weapons, and other contraband that they often bring with them) can not enter our nation.
Thanks for doing your job. I wish I had a Congressman like you in my own district.
I commend you for calling DHS Secretary Napolitano on her department's obviously politically biased report about right wing "extremists".
At a time when we see so little action or leadership from Republicans in Washington, it is refreshing to see you standing up for veterans and conservatives.
Can we take the next step, and start proceedings to remove Ms Napolitano, and replace her with someone who is qualified and ready to do the job?
It is obvious that she is not a good fit for the job of Secretary of Homeland Security if she is going to conduct partisan witch-hunts that categorize conservatives as threats based on their beliefs or their status as veterans of the U.S. Armed Forces - yet recognizes that it is extreme actions and threats, not ideas that are a danger when speaking of the left. This kind of blatant partisan double standard is not acceptable from a public employee. Why should only liberals have their ideas protected by the First Amendment? Do conservatives have no civil rights in Obamerica?
Also, if Ms Napolitano thinks that people are terrorists if they are opposed to illegal immigration, she needs to be tested for drug use, because she is out of touch with reality. The Department of Homeland Security should be actively seeking to secure the borders so that illegal immigrants (and the dugs, diseases, weapons, and other contraband that they often bring with them) can not enter our nation.
Thanks for doing your job. I wish I had a Congressman like you in my own district.
Tuesday, April 14, 2009
Education and budgets - a parable
A family had a son who got accepted at a great college out of state. Since the family valued education highly, the parents figured out the costs of tuition, books, rent, food, utilities, transportation, and other expenses to be $18,000 a year. The son argued that if he had the money for the year he could do a better job of making sure that it was spent wisely than if he had to write home every time an expense arose, so the parents agreed to put the money for the year into their son's bank account, and let him handle it. After their son graduated from high school, he was all set to move to the city where his new college was located, so his parents gave him the money for his first year of school - they decided that their son should have a bit of fun while attending school, so instead of just $18,000, they gave him $22,000 for the first year - an extra $4,000 above and beyond what he needed. The parents were happy to do this because they had been saving for their children's college for years, because they were a family who valued education. The son moved out of the house in early July, so he could get set up in a living space and maybe even get a part time job before school started that fall.
The son was enjoying his life in college, but when he came home for the winter break, he took his father aside. "Dad" he said, "I'm going to need a bit more money to make it through the year. I don't have enough to pay my spring tuition, because I flew to my girlfriend's house for Thanksgiving and I spent a lot of money on a fancy necklace for her this Christmas." His father was unhappy that his son had wasted his tuition money on frivolous things, but education was important to him, so he dipped into his retirement investments and gave his son the extra $5,000 he needed to finish the first year of school.
At the end of his first year of college, the parents gave their son $27,000 for his second year, because $22,000 hadn't been enough the first year. Even though they had to take quite a bit out of their retirement account to do so. It was a major setback to their finances, but education was important to them.
That September, their son made a frantic call home, asking for more money. It seems that he had decided to purchase a car, and while he could pay his tuition, he didn't have enough for rent or books. The parents were upset that he had spent the money on a car, when he was supposed to have used it to pay for his tuition and books, but because the family valued education, they sent him an extra $10,000. They sent the money even though this took all of the money out of their retirement account. They were still young, the parents thought, and they were a family who valued education.
That December, the parents purchased a plane ticket for their son to come home and visit them, since he told them that he couldn't afford it. It meant that they had no money for gifts for their other children, but seeing their older brother for the holidays would be a treat for the younger children, and the family could see how their son was doing in school.
When he came home, the son took his father aside again, and once more asked for additional money. "I didn't take a part time job this year, and my roommates moved out so that there would be more space in the apartment for my girlfriend. I'm going to need another $10,000 to make it through the year." His father was disappointed that his son had once again squandered his tuition and rent money on luxuries, but didn't want to refuse his son; after all, their family valued education. That night, he spoke to his wife about the problem. "I guess I could ask my boss for more hours, even if it means I won't have as much time to help the younger children with their after school activities and homework" she said. It was a difficult decision, but since the family valued education, they made the sacrifices with smiles on their faces, and gave their son $10,000 from the money they were saving for his younger siblings' college expenses.
That April, they received a telegram from their son, from the Bahamas. "School is going great" it said, "but I needed to release some stress over spring break. Expenses were higher than expected, please send $3,000 so I can pay rent and buy groceries for the rest of the year." The parents were worried that their son was making such poor choices and wasting the money on frivolous things while they scrimped and saved to pay, but they valued education, so they took more money out of their other children's college savings to send to their son.
That June, the parents prepared to give their son the money for his third year of college. Based on what his costs had been the previous year, they decided that they had to give him $50,000. This meant that there would be almost no money left in the college accounts for his younger siblings, but the father was working a lot of overtime and was also hoping for a big promotion, and the mother was starting to work on Saturdays to make extra money. They hoped that they would be able to put enough away for the other children to attend colleges, and warned their other children to start applying for scholarships.
Things went pretty well that year. Their son didn't ask for money during the fall, or when he came home at Christmas. The parents were relieved that they had finally been able to give their son enough money to pay for his education - because the family valued education.
That May, the parents received a letter from the school, indicating that their son had not yet paid his tuition. The school needed $8,000. The parents cleaned out all of their savings accounts to pay for it. Then they began to get letters from a credit card company. Their son had run up a credit card debt and hadn't made a payment in months. The credit card companies needed $4,000 to pay the son's debts - mostly textbooks and groceries. When the parents asked their son why he had put his textbooks and groceries on the credit card, instead of using the money they had given him, he told them that he had used up all that money on a weekend trip to Vegas with some friends. The parents were disappointed that he had wasted his textbook and grocery money, but scraped together enough money to pay the cards, because they wanted their son to be able to stay in college - after all, their family valued education.
That June, when their son came home, he asked the parents for the money for his last year of school. "With the extra expenses I had last year, it cost me $62,000. I guess I'll need at least that much this year." he told them. "Son," his father told him, "I'm sorry, but all that we can afford to give you this year is $30,000. That will cover tuition and books, rent, food, utilities, and leave you about $12,000 for things you want to do. I hope that will be enough."
"C'mon dad, my girlfriend likes it when I take her on mini-vacations on the weekends and buy her jewelry. The lease payments on my BMW are pretty hefty, not to mention the insurance... I know you can come up with more money than that - you always told me that we value education."
"We do value education, son. I'm working 20 hours of overtime a week, and your mother works six days a week. We hardly have any time to see your brothers and sisters, let alone help them with their homework. We've already exhausted the college savings for all of the children, as well as taken all of the money out of our retirement accounts. There's just no way we can afford to give you more than $30,000 this year.
"You could take out a second mortgage on the house, couldn't you? After all dad, what's more important than education?"
-----
What is more important than education? Is it more important that the son has a nice car, or that he can buy gifts for his girlfriend?
Was there enough money in the budget to pay for the son's education - if he had only made it a priority?
-------------------
In tonight's story, the parents were played by the citizens of California, the siblings were played by their children, and the son was played by your California State Legislature.
The son was enjoying his life in college, but when he came home for the winter break, he took his father aside. "Dad" he said, "I'm going to need a bit more money to make it through the year. I don't have enough to pay my spring tuition, because I flew to my girlfriend's house for Thanksgiving and I spent a lot of money on a fancy necklace for her this Christmas." His father was unhappy that his son had wasted his tuition money on frivolous things, but education was important to him, so he dipped into his retirement investments and gave his son the extra $5,000 he needed to finish the first year of school.
At the end of his first year of college, the parents gave their son $27,000 for his second year, because $22,000 hadn't been enough the first year. Even though they had to take quite a bit out of their retirement account to do so. It was a major setback to their finances, but education was important to them.
That September, their son made a frantic call home, asking for more money. It seems that he had decided to purchase a car, and while he could pay his tuition, he didn't have enough for rent or books. The parents were upset that he had spent the money on a car, when he was supposed to have used it to pay for his tuition and books, but because the family valued education, they sent him an extra $10,000. They sent the money even though this took all of the money out of their retirement account. They were still young, the parents thought, and they were a family who valued education.
That December, the parents purchased a plane ticket for their son to come home and visit them, since he told them that he couldn't afford it. It meant that they had no money for gifts for their other children, but seeing their older brother for the holidays would be a treat for the younger children, and the family could see how their son was doing in school.
When he came home, the son took his father aside again, and once more asked for additional money. "I didn't take a part time job this year, and my roommates moved out so that there would be more space in the apartment for my girlfriend. I'm going to need another $10,000 to make it through the year." His father was disappointed that his son had once again squandered his tuition and rent money on luxuries, but didn't want to refuse his son; after all, their family valued education. That night, he spoke to his wife about the problem. "I guess I could ask my boss for more hours, even if it means I won't have as much time to help the younger children with their after school activities and homework" she said. It was a difficult decision, but since the family valued education, they made the sacrifices with smiles on their faces, and gave their son $10,000 from the money they were saving for his younger siblings' college expenses.
That April, they received a telegram from their son, from the Bahamas. "School is going great" it said, "but I needed to release some stress over spring break. Expenses were higher than expected, please send $3,000 so I can pay rent and buy groceries for the rest of the year." The parents were worried that their son was making such poor choices and wasting the money on frivolous things while they scrimped and saved to pay, but they valued education, so they took more money out of their other children's college savings to send to their son.
That June, the parents prepared to give their son the money for his third year of college. Based on what his costs had been the previous year, they decided that they had to give him $50,000. This meant that there would be almost no money left in the college accounts for his younger siblings, but the father was working a lot of overtime and was also hoping for a big promotion, and the mother was starting to work on Saturdays to make extra money. They hoped that they would be able to put enough away for the other children to attend colleges, and warned their other children to start applying for scholarships.
Things went pretty well that year. Their son didn't ask for money during the fall, or when he came home at Christmas. The parents were relieved that they had finally been able to give their son enough money to pay for his education - because the family valued education.
That May, the parents received a letter from the school, indicating that their son had not yet paid his tuition. The school needed $8,000. The parents cleaned out all of their savings accounts to pay for it. Then they began to get letters from a credit card company. Their son had run up a credit card debt and hadn't made a payment in months. The credit card companies needed $4,000 to pay the son's debts - mostly textbooks and groceries. When the parents asked their son why he had put his textbooks and groceries on the credit card, instead of using the money they had given him, he told them that he had used up all that money on a weekend trip to Vegas with some friends. The parents were disappointed that he had wasted his textbook and grocery money, but scraped together enough money to pay the cards, because they wanted their son to be able to stay in college - after all, their family valued education.
That June, when their son came home, he asked the parents for the money for his last year of school. "With the extra expenses I had last year, it cost me $62,000. I guess I'll need at least that much this year." he told them. "Son," his father told him, "I'm sorry, but all that we can afford to give you this year is $30,000. That will cover tuition and books, rent, food, utilities, and leave you about $12,000 for things you want to do. I hope that will be enough."
"C'mon dad, my girlfriend likes it when I take her on mini-vacations on the weekends and buy her jewelry. The lease payments on my BMW are pretty hefty, not to mention the insurance... I know you can come up with more money than that - you always told me that we value education."
"We do value education, son. I'm working 20 hours of overtime a week, and your mother works six days a week. We hardly have any time to see your brothers and sisters, let alone help them with their homework. We've already exhausted the college savings for all of the children, as well as taken all of the money out of our retirement accounts. There's just no way we can afford to give you more than $30,000 this year.
"You could take out a second mortgage on the house, couldn't you? After all dad, what's more important than education?"
-----
What is more important than education? Is it more important that the son has a nice car, or that he can buy gifts for his girlfriend?
Was there enough money in the budget to pay for the son's education - if he had only made it a priority?
-------------------
In tonight's story, the parents were played by the citizens of California, the siblings were played by their children, and the son was played by your California State Legislature.
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