Author: bill

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Small Business Healthcare Relief Act Is Re-introduced

For those who are still interested in Health Reimbursement Accounts Zane Benefits posted an update on the legislation that has been introduced in Congress.

Two weeks ago, a group of legislators re-introduced the Small Business Healthcare Relief Act (S. 1697 and H.R. 2911). The legislation would allow small employers to once again use an HRA to reimburse employees for health insurance premiums and out-of-pocket medical expenses.

I was hopeful that Mr. Boustany  of Louisiana would re-introduce the legislation and that my Representative, Brad Wenstrup,  and my Senators, Rob Portman and Sherrod Brown, would step forward and co-sponsor the bill. This bill is a pretty simple, non-partisan health care reform. Although my representatives did not co-sponsor the bill I am pleased to see more sponsors and a Senate version of the bill. For more information about this bill you can read it at OpenCongress.org.

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Diverging Views On Health Care Reform

Now that the King v. Burwell case is over I was curious whether both sides would find common ground on meaningful health care reforms. I was surprised to hear that Kathleen Sebelius says the law is working as intended and we should use this new opportunity to build on its early success. She is not alone. Sara Rosenbaum provided this list of health care reforms in the article, Post-King: Moving Forward In A New Normal.

  1. Expanding Medicaid To Cover The Poorest People
  2. Making the ACA’s Private Insurance Provisions Work Better For Children, Low- And Moderate-Income Families, And People With Disabilities
  3. Making The ACA A More Potent Force For Cost Containment And Quality Improvement Building Primary Health Care Access For Medically Underserved
  4. Communities And Populations And Addressing The Underlying Social Conditions Of Health

John Goodman thinks there are some serious problems with the Affordable Care Act and lists these problems in the article,

Six Problems With The ACA That Aren’t Going Away.

  1. An Impossible Mandate
  2. Unworkable Subsidies
  3. Perverse Incentives For Insurers
  4. Other Perverse Incentives For Buyers
  5. Lack Of Access To Care
  6. Impossible Burden For The Elderly And The Disabled

It is interesting that neither side talks about the cost of health care for the middle class and the fact that the ACA has made health insurance unaffordable for unsubsidized people. In an ironic twist of fate the Affordable Care Act very existence depends on convincing these healthy, unsubsidized, middle class people to purchase health insurance from the exchange. When you look at the report from Avalere Health, Exchanges Struggle to Enroll Consumers as Income Increases, it is easy to anticipate a death spiral in the exchanges if only 2% of the eligible people with income over 400% over the federal poverty limit are enrolled in the exchanges. The problem for ACA supporters is no longer politics but math. As I wrote in a previous post the cost of health insurance from the exchange versus my grandfathered plan is a very strong incentive for me to keep my existing health insurance. Perversely if my health insurance is not grandfathered for another year, my second best choice is to go without health insurance since I am exempt from the individual mandate because “health insurance from the exchange is not affordable”. Everything is in place for the exchanges to fail and the ACA supporters say the law is working as intended. I guess we have to break it before we can fix it.

 

1427290263_ExchangePlansbyIncome1

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Did The Greek People Just Say No To Kicking The Can Down The Road?

Most of the news pundits and central bankers are aghast with yesterday’s referendum vote in Greece. According to the pundits it was common sense for the Greek people to vote yes, take the money, and kick the can down the road again. On the other hand it is a sign of insanity to keep doing the same thing and expect different results. From that perspective it make perfect sense that the Greek people want a different resolution this time.

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The Dreaded Debit Card Hold

Last week I finally figured out why I had some problems using the Discover Debit card in the past. My problems typically occurred when I purchased gasoline at the Sam’s Club gas station and then went in to purchase my groceries. Little did I know that “they” put a $100 hold on my account in addition to my gasoline purchase. So my available balance would be down $100 for three days. I guess I should see what other debit cards do.

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Se7en Hefeweisen And A Day In The Park

Christian Morlein's Se7en HefeweizenLast Saturday we went to the Moerlein Lager House to celebrate my mother-in-law and wife’s birthday and it almost was a disaster. We did not know it beforehand but there was a Gay Pride parade going on the same day and ending up at the park next to the restaurant at the same time as our reservation. We were almost to the restaurant when we found several roads blocked off. Fortunately I was able to make a scenic detour through Kentucky and was able to find some open roads on the other side of the restaurant. The restaurant was busy and festive. I noticed that much of the crowd was drinking what looked like a Hefeweizen and since I have been on a Hefeweizen kick this month, I took the opportunity to try Moerlein’s Se7en (Seven) Hefeweizen.  It was a nice Hefeweizen with hints of citrus. My only complaint was the small head on the beer. Here is my checkin on Untappd.

After the meal we went to Smale park. My wife wanted to see and ride Carol Ann’s Carousel. I was surprised in this high tech world how busy a low tech carousel was. The carousel was very pretty and a few minutes after arrived, a wedding party arrived. It was amusing to see the grooms and bridesmaids try to get on the horses in their tuxedos and dresses.

Then we went and played with the rest of the kids in the park. It has to bring a smile to your face to see your 84 year old mother-in-law making music by stepping on piano keys.

Here is one of those scenic bridges on my detour.

Roebling Suspension Bridge

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Supporting H.R.5860 – Small Business Healthcare Relief Act of 2014

I finally got around to asking my senators and congressional representatives for their support of grandfathered health care plans and H.R.5860 – Small Business Healthcare Relief Act of 2014. This bill which is still in committee looks like it re-instates the Health Reimbursement Accounts for small businesses. The method I chose to ask for their support was to create a letter to representatives and let OpenCongress.org send it to them. The purpose of Open Congress is to:

OpenCongress makes it easy to follow legislation in Congress, from bill introduction to floor vote, as well as profiles for senators and representatives. You can use the site to learn more about issues you care about and connect with others who share similar views.

You can find my letter at the H.R. 5860 page.

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Affordable Health Insurance And The Individual Mandate

2015-06-25 09_54_46-Exemptions Screener _ HealthCare1.govMy biggest financial problem for 2016 is keeping my grandfathered health insurance plan and paying for it with pre-tax money. In 2014 and prior years my health insurance was affordable since it was completely paid for with money from a Health Reimbursement Account(HRA) set up by my employer. Health insurance for healthy people was affordable and the HRA allowed my employer to pay for my health insurance with pre-tax money. Like most health care decisions before the Affordable Care Act it was a no-brainer. Then we passed the Affordable Care Act and everything became complicated and more expensive. In 2015 HRA’s become an inadvertent casualty of the Affordable Care Act. The next casualty I suspect will be my grandfathered health insurance plan. So I have three options:

  1. Convince someone in government to allow me to keep my grandfathered health insurance for another year.
  2. Not carry any health insurance.
  3. Get health insurance from the exchange.

No one should be surprised that health insurance from the exchange is not affordable and the only happy customers are those getting subsidies. According to the HealthCare.gov Exemptions Screener, I should be paying no more than 8% of my income on health insurance. For a couple earning $63,721(400% of the federal poverty level) this is only $425 a month. Last November I looked up the lowest cost bronze plan and it was going to cost me $979 a month or $11,748 a year.  For a couple earning $63,721, health insurance would have taken 18.4% of their income. According to HealthCare.gov a couple like me would have to earn $146,850 a year before a health insurance policy from the exchange became “affordable”. Only the subsidized, wealthy, chronically ill, or naive would choose health insurance from the exchange.

With health insurance from the exchange costing $11,748 or more per year in 2016, self-insurance becomes a financially attractive option.  As a healthy family who has gone without health insurance in the past(1998-2008) and who is exempt from the individual mandate because I cannot purchase “affordable health coverage” from the exchange, the biggest financial risk is a hospitalization that costs more than $12,000. If you have the discipline to have a large enough emergency fund to cover future health costs then this is an attractive, financially efficient second choice. $12,000 per year will buy a lot of health care especially if you are a savvy buyer. If I could get a catastrophic care policy priced at 4% of my income this would be my number one choice since it would be the best of both worlds, encouraging both healthy living and saving for medical expenses.

My first choice is to keep my existing health insurance and to convince the government to reinstate HRA’s for companies with less than 50 employees. My health insurance plan is almost as affordable as the subsidized insurance from the exchanges. As a person who has not filed an insurance claim in the last 15 years, I am by definition the perfect health insurance customer. It is probably in the best interest of the insurance industry to do whatever it takes to keep me as a loyal customer. Although my employer gave me a $500 a month bonus this year to pay for my health insurance I would be financially better off if that money went into a HRA. Taxing a health care bonus is just plain stupid. Once again it is in the best interest of the insurance industry to bring back the HRA before I get comfortable going without health insurance.

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The Irony of 6.4 Million People Learning That They Cannot Afford Health Insurance From The Federal Exchange

The greatest failure of the Affordable Care Act is that it did not make health care more affordable. It is ironic that the 6.4 million people the Affordable Care Act tried to help the most may now be personally affected by this failure. If the Supreme Court decides that it is the responsibility of Congress to fix the bill and not the IRS, these 6.4 million people will wake up to learn that their health insurance is much greater than 9.56% of their income. However uncomfortable it may seem for these 6.4 million people health insurance is neither affordable or a wise use of their limited funds. Although misery likes company I doubt they will derive any enjoyment from being in the same unenviable position as the rest of the people who did not get a subsidy from buying health insurance from the exchanges.

Affordability was the one issue that had the potential of making the Affordable Care Act a great legislative achievement. So the health insurance rates in the exchanges is proof that the supporters either ignored the issue or are so incompetent that they should not be managing health care policy. Recently I completed some affordability calculations using the lowest bronze 2015 health insurance quote for a two person family. Using the $979 per month premium from last November health insurance from the exchange health insurance would be 18.4% of the income for a couple earning 400% of the federal poverty level. This couple would have to earn $122,887 before their health insurance premiums would be 9.56% of their income. It is highly likely that health insurance rates will be much higher for me this Fall so the decision for me is simple. Just like signing up for health insurance as recently as 2008 was a no-brainer, it is a no-brainer in 2015 for me to not purchase 2016 health insurance from the exchange. The Affordable Care Act has made our dysfunctional health care system more dysfunctional.

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Was May Retail Sales Good Or The Continuation Of A Bad Trend?

When the May Retail Sales report came out I was a little puzzled. With the economy doing so poor recently was the May retail sales report a mere parlor game in economic reporting? Somebody besides me must find It amusing that 1% unadjusted growth could generate 2.7% adjusted growth. Although both Bizzyblog and Zerohedge had already posted their analysis on the May report, there were two things in the Retail Sales chart on the Zerohedge blog that caught my attention.

  1. When the Retail Sales year to year growth drops below five percent for an extended period of time, the economy is generally sick.
  2. The trend over the last two to three years is remarkably similar to conditions preceding the last two recessions.

Rather than copying Zerohedge’s chart I reproduced the Retail Sales(RSAFSNA) chart below using data from FRED since it shows the US recessions.

Since I was curious whether there was something magical about the 5% line I ran some simple statistics on the last 61 months of Retail Sales percent changes(Not Seasonally Adjusted) and found that the mean was 4.720%. Then I divided the sample into five equally sized groups based on percent change. The breakpoints for the quintiles are 2.871%, 4.136%, 5.314%, and 6.823%. For illustration purposes I assigned a grade to these values. As an example for every month in which the retail sales growth was greater than 6.823% I gave it a grade of ‘A’. It should come as no surprise that there were 12 months in the sample in which growth exceeded 6.823%. Using this analogy the grades based on the Retail Sales growth for the first five months of 2015 was ‘D’, ‘F’, ‘F’, ‘F’, and ‘F’. Obviously the May Retail Sales increase looks more like a continuation of a bad trend and does not confirm the press’s enthusiasm for a retail sales recovery. Even the 2.7% seasonally adjusted growth the press was so happy about would be an ‘F’ grade. The 2015 grades are actually worse than the first five months of 2014 which had grades of  ‘F’, ‘F’, ‘F’, ‘B’, and ‘C’. Most of the ‘D’ and ‘F’ grades occurred in the last two years and there were only two ‘B’ grades in 2014 and 2015. We have to go all the way back to July in 2013 to find an ‘A’ grade. Based on these statistics the 5% line looks like a pretty good indicator of healthy retail sales and a growing economy.

So now I am left with three questions:

  1. Has the Administration successfully transformed our consumer driven economy into a slow but not negative growth economy?
  2. Are we just one misstep from negative growth and an old fashioned recession?
  3. Since quantitative easing and zero interest rates have had less and less impact on the economy, what can the Fed do to avoid a recession in an election year?
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Why Is Increased Health Care Spending “bad” And Increased Spending At Wal-mart “good”?

For those folks fascinated by increased health care spending in a stalled economy there is a nice article, Health Spending Unscathed In Shrinking Economy, at the NCPA Health Policy Blog. John Fembup asked the question why is increased health care spending “bad” and increased spending at Wal-mart “good”? Here is my reply.

Historically only a few sectors of the economy have a multiplier effect on the rest of the economy. The two best examples of this is housing construction and the growth of the Goods sector. Most economic recoveries have been led by one or both of these sectors. So when major companies in these sectors report increased sales, this is important economic news. The logic is that if GM, Target, Costco, and Wal-Mart are having good years then it is possible that a broad based expansion is underway.

Historically health care spending had a weak correlation with Personal consumption expenditures(PCE) growth. Until 2014 the Goods sector had a strong correlation with PCE growth. In 2014 the positions changed. Health care spending became the leading contributor to PCE growth and the rest of the PCE sectors look like they were in a stalled economy. Based on this limited data you would have to conclude that increased health care spending does not have a multiplier effect on the economy.

Finally most of the increases in our standard of living can be attributed to innovation and productivity gains in the Goods sector. Health care has a poor record for innovation and productivity gains. The most interesting productivity gain that I have seen in health care was a county project to manage diabetes. It provided better care and lowered costs. If health care acted more like a business then they would adopt a more distributed decision-making organization structure to encourage this type of productivity gain. Health care is inherently a local service requiring local decisions. Instead the government and industry have embraced a more command and control organizational structure that generally gets its productivity gains from economies of scale. Since the Affordable Care Act has not generated any cost savings and has blown every budget, it looks like we got the worst of both worlds, increased centralization with no cost savings. We tried, we failed! It is both sad and exciting to think that if we want to increase our standard of living then it has become imperative that the health care industry innovate and focus on productivity gains. If we want to grow the economy then we have to be smarter about our down health care spending so the sectors that have a multiplier effect can grow.