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If 95% Of Climate Models Can Not Be Used To Predict Climate Why Are We Using Them To Set Government Policies?

CMIP5-90-models-global-Tsfc-vs-obs-thru-2013aRecently I have been pondering whether climate science is a valid science theory if it is consistently wrong. If we look at the definition of science from Wikipedia we get this definition.

Science (from Latin scientia, meaning “knowledge”[1]) is a systematic enterprise that builds and organizes knowledge in the form of testable explanations and predictions about the universe.[2][3]

When we look at Dr. Spencer’s graph shown on the right we can see that over 95% of the climate models are wrong. If the late Nobel prize winning physicist, Richard Feynman, was looking at that chart he probably would say this.

It doesn’t matter how beautiful your theory is, it doesn’t matter how smart you are. If it doesn’t agree with experiment, it’s wrong.

I will go one step further. You do not have a valid climate science theory until you successfully predict or explain something non-trivial about the global average temperature. Until then you are just a technician collecting data. The average person expects that when they are told that a government policy is based on science, it is based on science that has successfully predicted something. In the case of climate science we find that government policies are being proposed because “ninety-seven percent of climate scientists agree that climate-warming trends over the past century are very likely due to human activities”. If 95% of the climate models are wrong how can climate scientists say climate-warming trends are likely due to human activities? Where is the science that is successfully predicting something? Are we to infer that since the surface temperature stopped rising during the past decade that human activities stopped rising too? When you say that climate-warming trends are very likely due to human activities you did not leave any wiggle room for www.climate.gov to argue that natural climate cycles slowed down the rise during the past decade. Until the climate scientists can predict something non-trivial about the global average temperature it sure looks like we have put the cart before the horse.

cartbeforehorse

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Why Does the Affordable Care Act Discourage People From Buying Health Insurance?

I read the Yahoo article, Millions Trapped in Health-Law Coverage Gap, and was reminded of one my pet peeves with the Affordable Care Act. Why does the ACA push people into Medicaid if they want to buy subsidized health insurance on the exchange? If someone whose income is less than the Federal Poverty Limit wants to buy health insurance rather than receiving “free” Medicaid, it sounds like they think they belong in the middle class, their income problem is temporary, and they are taking personal responsibility for their health. This is the type of behavior health care reform should be encouraging rather discouraging.

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What I Learned About Cybercrime Last Week… Beware of the Air Conditioner Man!

Although it was not a surprising result KrebsonSecurity reported that the hackers who broke into Target used the network credentials of the HVAC contractor. Like most retailers when we see the HVAC contractor or other maintenance people in the building, we get out of the way and let them do their job with a minimum of supervision. I can understand in this interconnected world that the HVAC  contractor and Target want to know immediately if the HVAC equipment has malfunctioned. I am surprised that the HVAC equipment evidently used the same network as the POS terminals. As a person who fills out the annual PCI questionnaire there are a lot of questions about segregating and securing credit card data. Giving network credentials to the HVAC contractor kind of defeats the goal of segregating the credit card data from non-essential personnel. It does make you wonder what the security folks at www.healthcare.gov are doing. As far as I can tell the web site security questions are still unanswered. It make me wonder what they have done and what still needs to be completed. Is there anything the www.healthcare.gov security folks can learn from the Target incident?  If you believe that the exchange should be operating more like a business than an inept government program, this would be a good time to for the Affordable Care Act management to be more proactive and tell the public how secure their personal data is at  www.healthcare.gov. Hmm… It’s beginning to look like another missed opportunity.

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Pulling out of Obamacare an option? Huh!

My inner MBA was piqued when the Aetna CEO talked openly about pulling out of exchanges as an option. Here is what he said in a CNBC interview.

There is so much uncertainty about Obamacare that Aetna, the U.S.’s third-largest insurance provider, may be forced to double its rates or opt out of the program, the company’s CEO, Mark Bertolini, told CNBC on Thursday.

What action Aetna will take is still up in the air, but the company doesn’t plan to set its 2015 Obamacare rates until May 15. Between now and then, though, Bertolini said he’s trying to get the necessary information from the Obama administration to properly price its insurance products.

I think I understand Aetna’s strategy in Ohio where they have opted to not participate in the exchange. Since they are not one of the top two health insurers for the state, they have limited marketing power. It makes sense that they adopted a wait and see strategy toward participating in the Ohio exchange. Aetna’s strategy is important to me. My AARP-Aetna Essential Healthcare plan is scheduled to be canceled in 2014. If the early exchange enrollment data ends up to be better than expected then I think Aetna will participate in the exchange in 2015. If the price is right then I will continue to insure with them. However if the exchange enrollment data is ugly and the government fixes scares Aetna then there is high likelihood that they will pull out of Ohio. Like most people I would like to keep my health insurance plan but I really want the number of insurance companies competing in Ohio to go up not down. More insurance companies competing in the market is probably as close as we get to getting better insurance rates in the next couple of years. On the other hand I understand Aetna’s predicament. The market is telling them to consolidate and focus their efforts on better markets.

What surprises me about Mr. Bertolini’s comments is that he is talking about exiting exchanges in one of those better markets. Let’s be honest here. Aetna has better managers and data than the government. That is just how businesses roll. I cannot help but speculate that his early warning is because the early enrollment data and administrative costs he is seeing is ugly. He goes on to say that Aetna has about four months to figure out how to make money in the exchange market. You cannot say that he didn’t warn us. Although each state will have different results, if Aetna does not think they can be profitable in their strong market states then this does not bode well for weak markets like Ohio. The best I can hope for is the administration will have another panic attack about insurance polices getting canceled and end up telling the insurance companies that they can continue those grandfathered policies for another year.

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Is the NAACP Engaged in Illegal Partisan Politics?

Last night I watched a video clip on Fox of Senator Tim Scott responding to remarks made by a NAACP leader, Rev. William Barber. Last year I looked at the NAACP and concluded that Tea Party organizations would likely set up political activity guidelines modeled after the NAACP guidelines. They were best example of a 501(c)(3)/501(c)(4) organization that is engaged in issue politics and political education while successfully meeting the IRS guidelines for political activity. So I was surprised to hear a NAACP leader engaged in petty partisan politics when the True The Vote versus the IRS issue is a hot issue. The last thing the IRS wants to explain again is how their treatment of the True The Vote organization is not different than the way they would treat other 501(c)(4) organizations such as local NAACP affiliates. Rev. Barber did not talk about voter registration or educating people about the issues. He engaged in a personal attack of an elected official. The IRS has frowned upon this behavior in the past. The parent organization of the NAACP has specific instructions to its 501(c)(4) affiliates forbidding partisan politics and Rev. Barber’s actions seem to be unnecessarily risky in an election year. If the IRS is applying the same standards to all 501(c)(4) organizations then they should be talking to the NAACP today. Rev. Barber crossed the line.

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Variations on an All-Payer System

For some time I have been toying with a single rate solution for some of our healthcare problems with the poor and the elderly. The disparity in prices paid for the same health care service between Medicaid, Medicare, insurance companies, and uninsured patients is the definition of insanity. It is hard to believe that we actually believe we can reform health care when we keep pricing the services the same stupid way over and over again. Pricing insanity equals lots of unintended consequences. After reading a blog post on The Incidental Economist I realize that this system is called an “all-payer rate setting”. So here are my ideas:

  • All-Payer Rate Setting for the Poor
  • All-Payer Rate Setting for the Elderly
  • All-Payer Rate Setting for the High Cost Patients

All of these groups suffer from price insanity. My inner MBA say that a mutually acceptable price for a health care service exists between the Medicaid, Medicare, and the insurance company prices. The all-payer rate setting for the poor would close the gap between Medicaid, the insurance companies, and the uninsured. Hopefully this would minimize the financial impact of coverage gaps caused by Medicaid churning. Likewise the all-payer rate setting for the elderly would close the gap between Medicare, the insurance companies, and the uninsured. In this case I am referring to the elderly as older than 55 and hopefully it would reduce the impact of community rating on individual insurance group market and take advantage of Medicare pricing power. The all-payer rate setting for the high cost patients is an attempt to control or cap costs. If we combine all-payer pricing with a discount schedule based on income and family size like they have at Trihealth, we probably have a pretty sane pricing solution for the groups who have the greatest financial risk from a health care disaster. The loser in all of these cases is the hospitals, doctors, and drug companies but these are the folks who benefited from the price insanity. This is what you should expect when the U.S. total health expenditure (PPP) per capita leads the rest of the world by a considerable margin.

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Why Did So Many People Sign Up For Medicaid Through The Exchanges?

The more I learn about Medicaid the more I am puzzled why so many people signed up for Medicaid through the exchanges. With all of the churning Medicaid causes I doubt the people who are already familiar with Medicaid are thrilled that they are signed up again. Despite the web site problems they came in droves. I suspect they were hoping for free health insurance and got Medicaid instead. That has to be disappointing. It is the old bait and switch routine. So the sales technique we find reprehensible for used car dealers is okay for government health exchanges? So now we are left with the question, how many of these Medicaid signees are actually benefiting from Medicaid expansion or are most of the Medicaid signees benefiting from better health care in name only?

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What Would @planetmoney Say About The Job Losses Under The Affordable Care Act?

plantmoneyOne of the most contentious issues brought up by the Congressional Budget Office report on the Affordable Care Act is the job losses. It is by design that the Affordable Care Act allows people to choose to turn downsize their job and replace their employer sponsored health care plan with an equivalent one from the exchange. There are people who have valid medical or personal reasons who want to pursue this path. These are intentional job losses and probably desirable. The problem is keeping the people who really do not have a valid reason for downsizing their job from pursuing this strategy. As much as we might want to compassionately encourage the former group to downsize, we really want to discourage the slackers from going down this path. Unfortunately the Affordable Care Act does not really have a plan of disincentives for these prospective slackers. If we really believe we can grow out of our economic mess and pay for an expanded health care system then we must minimize the number of slackers.  Before the Affordable Care Act transforms our health care system in to a “Mini-Me” version of the European system, it may be a good time to revisit Planet Money’s podcast, Germany’s Painful Unemployment Fix, and Germany’s use of incentives and disincentives to bring down unemployment rates. It is ironic that the reforms that made Germany’s labor market look more like the labor market in the U.S. may eventually be adopted by us as our welfare state repeats the same mistakes Europe made. Oy vey!

For a more scholarly review of the impact of the ACA on employment you can read Rea Hederman’s article, ”Incentives Matter: Why Estimated Job Losses Under Obamacare Have Tripled” and University of Chicago economist Casey Mulligan’s paper, “Average Marginal Labor Income Tax Rates under the Affordable Care Act”.

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Second Month of My “Every Dollar Has A Name” Budget

Last month I bit the bullet and decided to be a bit more proactive about my spending, budgeting, and saving. Part of the problem is that I need to save more money for my emergency fund and I am embarrassed with 2013 spending.  With the likelihood that my health insurance deductible will be much higher, a larger emergency fund is required. After analyzing my Amazon spending for 2013, I can see that I can make a major improvement in my spending by controlling my Amazon spending. With the recent problems with credit card theft it is in my best interest to watch my credit card expenses very closely. The solution to these problems is to give every dollar a name and monitor my progress with Quicken 2014. As I enter my second month on the system I can say that my budget is reasonable and balanced. The biggest psychological boost comes from monitoring the accounts frequently and seeing that you are winning.