Month: September 2013

by

Why Not Delay the Individual Mandate?

I wrote most of this comment on the post, Why Not Delay the Individual Mandate?. Then I thought of another individual mandate alternatives and added it this post.

Okay, let’s get real. My family is healthy and we purchase our insurance through the individual market. Our rates are low compared to the proposed rates available via Affordable Care Act. We have a real possibility of 100% increase in our insurance premiums. I have skin in this game.

I read the Urban Institute article and I remain unconvinced by their argument. Although I am at the greatest risk for unintended consequences, I am still in favor of postponing and eventually getting rid of the individual mandate. Despite their arguments the Individual Mandate is still a really dumb idea. Here is my reasoning:

  1. If uncompensated hospital care is the primary problem, then I prefer our existing system in which these costs are spread over a much larger population.
  2. If adverse selection is the primary problem, the Affordable Care Act proposal is only slighter better than doing nothing. Even the ACA supporters recognize that their proposal most likely will not work if the a few high cost patients get insurance(charity) in the individual market. This market is just too small to support many high cost participants. The only workable solution is to spread this charity over a larger population group. There are several ideas on how this can handled.
    1. Some ACA supporters argue that we need to go to a single payer system and the failure of the individual market is part of the path to this final solution.
    2. A few others are arguing that we should single pay these high cost un-insurable patients. I call this the Medicaid solution.
    3. A variation of #2 is that we expand the high risk insurance pool. The ACA high risk pool is presently closed to new participants.
    4. Another possibility is a Federal re-insurance plan to cover high cost customers. When you go over a certain payout amount, the government re-insurance kicks in. I think the Dutch use a variation of this idea to limit the risk a single unlucky customer will bankrupt the insurance company. I call this the FDIC solution.

My gut feeling is that the most successful plan to create a workable individual insurance market is to stick the insurance companies with the un-insurables and let them lobby the state/Congress for help. When you piss off the middle class, you should expect that there are consequences.

Another point that I did not make in the original comment was the point that the Urban Institute article made that one of the objectives of the Individual Mandate was to “to maximize insurance coverage” as if this would magically lead to better health care outcomes rather than outright theft from the middle class. Their idea is that if you build it, they will come. I call this the “Field of Dreams” health insurance argument. Unfortunately health insurance was a product created for the middle class. The rich do not need it and the poor cannot afford it. It worked for the middle class when it was affordable thirty years ago but not so well for the rich and poor. Despite the fact that health insurance was not working for the middle class, the ACA supporters took this idea and said that if we subsidize the the health premiums it should work for lower income people. This is a variation of the “free health clinic” argument. Unfortunately our experience with “free health clinics” is that they have been for around for a long time and we are still dealing with the same health problems. Do the ACA supporters really expect that “free health insurance” will have a different result than the free health clinics? My best guess is that health insurance does not heal people. Hospitals do not heal people.  People heal people. Middle class people schedule doctor’s appointments when they find a health problem. Lower income people go to the emergency room when they find a health problem. Different strokes for different folks. As an example of the problem we are facing, for at least the last twenty years we have had approximately “free medical care”  for “at risk” mothers in Hamilton county. This “free medical care” was tied to an aggressive campaign by Cincinnati Children’s Hospital to reduce infant mortality and yet we still have an infant mortality rate for black mothers that is twice the rate of white mothers. I only have to drive thirty miles to be surrounded by third world infant mortality outcomes. Health care outcomes for the poor is truly “complicated” and health insurance is a small piece of puzzle. I have no confidence that the Affordable Care Act will improve health care outcomes for the poor and I doubt that any progress in health care outcomes will be the result of a federal program. It was purely a political maneuver completely disconnected from the needs and desires of the poor and middle class. I find it truly amazing that people who did not buy health insurance before will become magically happy when they are forced to make their first health insurance payment. Obviously they are better people than me. I do not remember ever being happy making an insurance payment. My most amusing thought is that the ACA supporters think that a single, working mother who is living paycheck to paycheck will pay a health insurance premium rather than buying the latest basketball shoe for her teenage son. Talk about someone who is out of touch. I was recently reminded of this situation when I listened to Planet Money’s podcast, Episode 487: The Trouble With The Poverty Line. As a volunteer for Habitat for Humanity I heard several variations of this same story. The outcome of each story is still the same. Poverty is complicated.

by

Hank’s Hefeweisen V2

Hank' s Hefeveisen V2
Hank’ s Hefeveisen V2, originally uploaded by billhuber.

This is my second attempt at brewing Hank’s Hefeweizen from MidWest Supplies. Here are some modifications I incorporated to make a better beer.

  1. I think that the problems getting to my final gravity are related to my use of filtered rain water. So I opted to add a half teaspoon of calcium chloride to the boil. It seems to have worked since the final gravity is almost spot on.
  2. I froze two large blocks of filtered water to shorten the time to cool the boil down to eighty degrees. In my case I sanitized two plastic quart containers we had on the shelf and then filled them with water. It took two days for the containers to be frozen solid.
  3. Since this is a lighter color beer, I steeped the grains in 3 gallons of water and made sure the temperature did not go over 156°. My plan is to steep the lighter color beers in 3 to 3 1/2 gallons of water.
  4. I used new caps to bottle the beer. I lost several beers from my Pale Ale batch when the reused caps did not get a good seal. At 3¢ a cap it is not worth the risk.
  5. I used the liquid Hefeweizen yeast from White Labs this time and got a robust fermentation. It actually came out of the air lock.

When I transferred the beer to the carboy I tested the beer and I knew I had something special. Although the fermentation was not complete it had already developed some nice flavors. It is now more than five weeks after the boil. This is the first beer I have been anxious to try. After drinking a couple of bottles I can say that it has the traditional Hefeweizen wheat flavor with a hint of banana. It is an easy beer to drink and is definitely one of my favorites.

by

Health Care Reform for the Forgotten Man

As a person who purchases their health insurance in the individual insurance market place I do not feel sorry for the Affordable Care Act supporters. I am keenly concerned with what I call Health Care Reform for the Forgotten Man will look like. I was recently reminded in a post by Harold Pollack on the Incidental Economist blog than the supporters of the Affordable Care Act are in a pissing match with the insurance companies about covering people who are both uninsured and un-insurable. Asking insurance companies to take customers they are going to lose money on is a dumb way to run an insurance company but that is the Affordable Care Act’s supporters big idea. As a healthy person I did not ask to be involved in their idiotic debate but in their perverted political logic they decided that healthy people like me can be coerced into helping them solve the problem with the un-insurables. This is the Forgotten Man scenario outlined by William Graham Sumner and made famous by the Amity Shlaes book, The Forgotten Man: A New History of the Great Depression. I thought we learned our lessons after a decade of failed grand ideas in the 1930’s. Good policies have to make sense to the people paying for them. Health insurance was a product created for the middle class and paid for the middle class. The rich do need it and the poor do not have the money to buy it. Do we really want to go down the path in which health care insurance reforms do not make sense to the man and woman who are ultimately paying the bill? Are we really asking the most price sensitive people in the health insurance market to bear a disproportionate share of society’s burden for un-insurables and hope that it turns out okay?

So where do we go from here? Once again Harold Pollack reminds us that there is no room for debate. Recently he dismissed a fairly modest proposal for individualized health insurance plans as a non-starter. As a healthy person I think that an individualized health insurance plan is the next logical step for health care reform. In fact I will go one step further. My perfect health care plan is an individualized health care plan issued from my local hospital that includes my local doctor. The perfect plan for the business I work at is a defined contribution plan. If we combine both of these together we arrive at the conclusion that if health care is to evolve to a more perfect system then it will be primarily a local solution with possibly some state-wide or regional features. This local focus does make you wonder how a federal program became the big player in an inherently local problem. If health care is to evolve into a better system then the Affordable Care Act looks like a step in the wrong direction. My second choice is a plan similar to the one they offered when I first started working in 1976. Everyone signed up for the plan because it was inexpensive and inclusive. When the third party payer system is working right and large group plans are cheaper than individual plans, this type of solution is a no-brainer. Unfortunately we have strayed far from the path since 1976. Since most large group plans are more expensive than the individual plans it is easy conclude that the third party system is already dead and that businesses will enter into a defined contribution arrangement as quickly as possible. My third choice would be to keep my existing plan and rates. Every time a supporter for the Affordable Care Act says that there are no alternatives I grit my teeth. It is bad enough that my rates are rising rapidly but now my insurance company, Aetna, has announced that they are not going to participate in the state exchange. All of this uncertainty and fear was not supposed to be happening to healthy people who had health insurance. If the plan by the Affordable Care Act supporters was to make everyone miserable, they have succeeded. Yea, I am pissed. So I am left with my fourth choice, the Affordable Care Act. It does nothing for me except cost more. The supreme irony of the Affordable Care Act is that it is littered with so many failed programs, delayed mandates, and confusing regulations that it is the poster child for smaller government. I doubt a libertarian could have deliberately screwed up the Affordable Care Act as well as its well intentioned supporters have. The best way to judge the Affordable Care Act reforms is to see whether the reforms can stand on their own or whether they require the IRS to enforce them. Most of us can still remember when we had perfectly good health care plan without IRS involvement. The supporters of the Affordable Care Act are now arguing that although there are some flaws in the Act this is a good first step for health care reform. From what I have seen of the reforms that is akin to throwing a grenade into a crowded room and saying that is a good first step at getting people to exercise more. At some point we have to start realizing that the Affordable Care Act is not a creative destructive force of good but a plain old, well intentioned, destructive force. This is something that the unions and the general population agree on. We have seen the future of health care and it looks a lot like Detroit.

by

Quotes on Writing

Here are some sage quotes on writing collected by Business Insider writer, Megan Willett.

On Getting Started:

“I always advise children who ask me for tips on being a writer to read as much as they possibly can. Jane Austen gave a young friend the same advice, so I’m in good company there.” – J.K. Rowling, “Harry Potter” series.

“I would advise anyone who aspires to a writing career that before developing his talent he would be wise to develop a thick hide.” – Harper Lee, “To Kill A Mockingbird.”

“You can’t wait for inspiration, you have to go after it with a club.” – Jack London, “White Fang.”

On Word Choice And Punctuation:

“Never use a long word where a short one will do.” – George Orwell, “1984.”

“If you are using dialogue ”” say it aloud as you write it. Only then will it have the sound of speech.” – John Steinbeck, “The Grapes of Wrath.”

“Cut out all those exclamation marks. An exclamation mark is like laughing at your own joke.” – F. Scott Fitzgerald, “The Great Gatsby.”

On Story Development:

“The writer’s job is to get the main character up a tree, and then once they are up there, throw rocks at them.” – Vladimir Nabokov, “Lolita.”

“A short story must have a single mood and every sentence must build towards it.” – Edgar Allen Poe, “The Tell-Tale Heart.”

“Get it down. Take Chances. It may be bad, but it’s the only way you can do anything really good.” – William Faulkner, “The Sound and the Fury.”

“Your intuition knows what to write, so get out of the way.” – Ray Bradbury, “Fahrenheit 451.”

On Editing:

“Write drunk, edit sober.” – Ernest Hemingway, “For Whom the Bell Tolls.”

“When your story is ready for rewrite, cut it to the bone. Get rid of every ounce of excess fat. This is going to hurt; revising a story down to the bare essentials is always a little like murdering children, but it must be done.” – Stephen King, “The Green Mile.”

“My own experience is that once a story has been written, one has to cross out the beginning and the end. It is there that we authors do most of our lying.” – Anton Chekhov, “The Lady with the Dog and Other Stories.”

“Substitute ”˜damn’ every time you’re inclined to write ”˜very;’ your editor will delete it and the writing will be just as it should be.” – Mark Twain, “The Adventures of Tom Sawyer.”

“Writing is easy. All you have to do is cross out the wrong words.” – Mark Twain, “The Adventures of Tom Sawyer.”

And Why Simplicity Is Always Key:

“The most valuable of all talents is that of never using two words when one will do.” – Thomas Jefferson, “The Declaration of Independence" and other writings.

“Think like a wise man but communicate in the language of the people.” – William Butler Yeats, “Fairy and Folk Tales of the Irish Peasantry.”

Read more: http://www.businessinsider.com/quotes-on-writing-from-famous-authors-2013-9#ixzz2f3LzlKa9

by

The First Law of Growing Middle Class Wealth

To grow middle class wealth you must be making things bigger, better, faster, or cheaper.

This law is an acknowledgement that financial stimulus, bubbles, and wealth redistribution schemes create a temporary sense of wealth and aggravate the problems with income inequality. The crux of the problem is that financial stimulus, bubbles, and “bad” wealth redistribution schemes increase the risk of bad and delayed investment decisions on products that have the potential to create middle class wealth. Unless we are able to perpetuate a cycle of stimulus, bubbles, and new “bad” redistribution schemes, this temporary wealth is not sustainable and eventually the bad decisions have to be paid for. The key to growing middle class wealth is making good decisions that reduce risk and encourage the investment in products that can grow middle class wealth.

The background for making this statement is that history has shown that gains from productivity increases are sustainable. The best examples of these gains are the Industrial Revolution in the 1800’s, the innovative products at the beginning at the 20th century(e.g. automobiles, telephones, steel, oil, farming, etc.), and more recently the productivity gains from computers and computerization in the 1980’s. Arguably the increased risk felt by businesses in the 1930’s with the increased regulations and wealth redistribution schemes reduced capital investment and prolonged the depression. This was an argument put forth by Amity Schlaes in her book, The Forgotten Man. A similar argument can be made about the last thirteen years. With the real estate, financial, and health care sectors leading the way income inequality has gotten worse and we have not invested in products that grow middle class wealth. Instead we created a system that perpetuates decision making that results in temporary wealth and stagnant middle class growth. At the beginning of this century it was real estate and now its stocks and health care. Arguably the biggest beneficiary to the Federal Reserve quantitative easing policy is stocks. Eventually the Federal Reserve will taper off its quantitative easing policy and our health care expenses will reduce to the rates paid by the rest of the world. We have gone from one bubble to the next and gotten more separated from the policies that help the middle class grow their wealth. Until we get back to making things bigger, better, faster, or cheaper we will be caught in a zero sum game with emerging economies we cannot win.

The first corollary to the law is:

Growing middle class wealth is the only economic tide that lifts all ships.

by

Echoes From Vietnam

Since I am old enough to personally remember the Vietnam war I am surprised how far we have strayed from the lessons of that war. As the Vietnam war wound down we promised ourselves we would only enter “good” wars we could win both militarily and politically and to not enter into “bad” wars we could not win either militarily or politically. That left a lot of wiggle room in the middle but from our Vietnam war experience the term, “limited” war, is both an oxymoron and a red flag. The first Iraq war was a good example of politicians and military leaders abiding by these lessons. We won the military war handily but had mixed results with political changes inside Iraq. The second Iraq war and the Afghanistan wars were less successful with the military and political objectives but at least we tried to win the hearts and minds of the people to a mutually beneficent cause. When we look at the proposed limited strike against Syria and the political plan to win the hearts of the Syrian people, this is a “bad” war. If this war is actually a campaign to counter a global Islamist insurgency then how do we pick a side? Do we help our terrorist friends in Al-Qaeda or Hamas? Is this another fourth generational war we are doomed to lose because our thinking is still stuck in the 1960’s? Similar to our problems trying to arbitrate Sunni-Shiite problems in Iraq, it is even less likely that the end game for this war will result in Syrian Sunni and Shiite people agreeing to a mutually beneficial political objective. Unfortunately for our politicians the American population know a “bad” war when they see one. It is ironic to hear John Kerry make the case to engage in this “bad” war. If anyone should know, Mr. Kerry should know that “bad” wars can make or dramatically shorten political careers. This is a war we need to walk away from.