Monday, March 1, 2010

Barker's Newsbites: Monday, March 1, 2010


Yes... America's Olympic Hockey Team failed the nation... but I won't!

(*WINK*)

Check out the Comments Page of this thread for today's newsbites.
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12 comments:

William R. Barker said...

http://online.wsj.com/article/SB10001424052748703444804575071294139286892.html

Natural experiments are rare in politics, but few are as instructive as the prototype for ObamaCare that Massachusetts set in motion in 2006. The bills for "universal coverage" are now coming due, and it appears the state political class is prepared to do lasting damage to one of America's top-flight health-care systems.

For fiscal 2010 taxpayer costs are $47 million over budget, in part due to the recession, and while the $913 million Mr. Patrick requested for 2011 is a 5% increase over 2010, spending has grown on average 6.7% per year. Meanwhile, average Massachusetts insurance premiums are now the highest in the nation.

Since 2006, they've climbed at an annual rate of 30% in the individual market. Small business costs have increased by 5.8%. Per capita health spending in Massachusetts is now 27% higher than the national average, and 15% higher even after adjusting for local wages and academic research grants. The growth rate is faster too.

As in Washington, the political class and providers blame insurers, but a better culprit is the state's insurance regulation. Incredibly, the average "medical loss ratio" in Massachusetts for individual policies is 112%—that is, insurers pay $1.12 in benefits for every $1 in premiums. This is the direct result of forcing insurers to charge everyone more or less the same rate regardless of age or health status, which makes it rational for people to wait to enroll until they need expensive coverage.

Another reason costs are so high is that state regulations have mandated that insurance coverage be far richer than the rest of the country. The average insurance deductible is 28% lower than the U.S. average, and the benefits are more generous with less cost-sharing. Patients are thus insensitive to the cost of care.

Thirty states imposed hospital rate setting in the 1970s and 1980s. Except for Maryland, every one of them eventually eliminated it—including Massachusetts, in 1991—partly because it didn't control costs. A 1988 study in the Journal of New England Medicine found that the states with the most stringent rate-setting had mortality rates 6% to 10% higher than those that didn't.

All of this is merely a preview of what the entire country will face if Democrats succeed with their plan to pound ObamaCare into law in anything like its current form. Massachusetts is teaching the country a valuable lesson in how not to reform health care, if only anyone would pay attention.

March 1, 2010 at 9:34 AM
William R. Barker said...

http://online.wsj.com/article/SB10001424052748704231304575091600470293066.html?mod=WSJ_Opinion_LEFTTopOpinion

As Washington prepares to revisit the subject of health-care reform, perhaps some fresh experience from Middle America would be of value.

When I was elected governor of Indiana five years ago, I asked that a consumer-directed health insurance option, or Health Savings Account (HSA), be added to the conventional plans then available to state employees. I thought this additional choice might work well for at least a few of my co-workers, and in the first year some 4% of us signed up for it.

In Indiana's HSA, the state deposits $2,750 per year into an account controlled by the employee, out of which he pays all his health bills. Indiana covers the premium for the plan. The intent is that participants will become more cost-conscious and careful about overpayment or overutilization.

Unused funds in the account—to date some $30 million or about $2,000 per employee and growing fast—are the worker's permanent property. For the very small number of employees (about 6% last year) who use their entire account balance, the state shares further health costs up to an out-of-pocket maximum of $8,000, after which the employee is completely protected.

The HSA option has proven highly popular. This year, over 70% of our 30,000 Indiana state workers chose it, by far the highest in public-sector America.

State employees enrolled in the consumer-driven plan will save more than $8 million in 2010 compared to their coworkers in the old-fashioned preferred provider organization (PPO) alternative. In the second straight year in which we've been forced to skip salary increases, workers switching to the HSA are adding thousands of dollars to their take-home pay. (Even if an employee had health issues and incurred the maximum out-of-pocket expenses, he would still be hundreds of dollars ahead.) HSA customers seem highly satisfied; only 3% have opted to switch back to the PPO.

The state is saving, too. In a time of severe budgetary stress, Indiana will save at least $20 million in 2010 because of our high HSA enrollment. [T]he state's total costs are being reduced by 11% solely due to the HSA option.

In 2009...state workers with the HSA visited emergency rooms and physicians 67% less frequently than co-workers with traditional health care. They were much more likely to use generic drugs than those enrolled in the conventional plan, resulting in an average lower cost per prescription of $18. They were admitted to hospitals less than half as frequently as their colleagues. Differences in health status between the groups account for part of this disparity, but consumer decision-making is, we've found, also a major factor.

Overall, participants in our new plan ran up only $65 in cost for every $100 incurred by their associates under the old coverage. Are HSA participants denying themselves needed care in order to save money? The answer, as far as the state of Indiana and Mercer Consulting can find, is no. There is no evidence HSA members are more likely to defer needed care or common-sense preventive measures such as routine physicals or mammograms.

March 1, 2010 at 12:25 PM
William R. Barker said...

http://online.wsj.com/article/SB10001424052748704231304575092373995223204.html?mod=WSJ_Opinion_AboveLEFTTop

It was another impressive three months at Fannie Mae, as Uncle Sam's mortgage finance company reported a fourth quarter loss of $16.3 billion. That wasn't quite as strong as the third quarter loss of $19.8 billion, but give Fannie's managers credit for trying.

[$16.3 billion plus $19.8 billion equals $36.2 billion in two quarters alone...]

"Through this prolonged stress in the housing market, we are helping homeowners across the country, supporting affordable housing, and providing financing to keep the residential markets functioning," declared Fannie president and CEO Mike Williams, in explaining the losses.

It takes skill and determination to lose that much money, and Fannie seems up to the task.

(*SNORT*)

Keep in mind that losing money is now Mr. Williams's job. Fannie and its sibling Freddie Mac became wards of the Treasury in 2008, after years of denying that they posed any financial risk to taxpayers. But rather than wind them down, or at least limit their losses, the Obama Administration has ordered them to modify hundreds of thousands of mortgages in an attempt to avoid foreclosures.

* BECAUSE, HEY... WHY WOULDN'T I WANT TO SUBSIDIZE A BUNCH OF MORONS THROUGH MY TAXES EVEN AS I PAY MY OWN BILLS ON TIME IN FULL!

(*GRITTING MY TEETH*)

According to Fannie's 10K filing with the SEC, the company lost $26.4 billion in 2009 from participating in the Obama Administration's Home Affordable Modification Program.

Treasury would rather have the losses laundered through Fan and Fred than have Congress vote for new bailout money. So last Christmas Eve, Treasury announced that it was lifting the $400 billion loss cap on the two companies, creating a potentially unlimited liability. And late Friday, Fannie announced that it has asked Treasury for $15.3 billion more to cover its anticipated losses. For those keeping score, that's $76.2 billion so far in taxpayer commitments to Fannie, with much more to go.

Oh, and we almost forgot: Last week, Secretary Timothy Geithner told Congress that Treasury will wait until next year to propose a plan to reform the companies...

(*SIGH*)

March 1, 2010 at 12:25 PM
William R. Barker said...

http://www.cato.org/pub_display.php?pub_id=11375

[I]n the long-run, the only way to spend less on health care is to consume less health care. Someone, sometime, has to say no. But the incentives under our current health care system perversely encourage everyone to say "yes."

Essentially, we all want to live forever. This makes health care a very desirable good. At the same time, the normal restraints imposed by price are frequently lacking. Today, of every dollar spent on health care in this country, just 13 cents is paid for by the person actually consuming the goods or services. Roughly half is paid for by government, and the remainder is covered by private insurance. And, as long as someone else is paying, consumers have every reason to consume as much health care as is available.

On the other, when consumers share in the cost of their health care purchasing decisions, they are more likely to make those decisions based on price and value.

Think of it this way. If every time you went to the grocery store, someone else paid 87 percent of your bill, not only would you eat a lot more steak and a lot less hamburger — but so would your dog. And food costs would go up for everyone.

The RAND Health Insurance Experiment, the largest study ever done of consumer health purchasing behavior, provides ample evidence that consumers can make informed cost-value decisions about their health care. Under the experiment, insurance deductibles were varied from zero to $1,000. Those with no out-of-pocket costs consumed substantially more health care than those who had to share in the cost of care. Yet, with a few exceptions, the effect on outcomes was minimal.

And, in the real world, we have seen far smaller increases in the cost of those services, like Lasik eye surgery or dental care, that are not generally covered by insurance, than for those procedures that are insured. In fact, a study by Amy Finklestein of MIT suggests that nearly half of the per capita increasing health care spending is due to increased health insurance coverage.

No one is suggesting that people shouldn't have insurance. But insurance is ultimately meant to spread the risk of catastrophic events, not to simply prepay your health care. Your homeowners insurance covers you if your house burns down. It doesn't pay to mow your lawn or paint the fence.

* I FEAR THAT THE MAJORITY OF MY FELLOW AMERICANS ARE TOO STUPID AND/OR TOO SELFISHLY SHORT-SIGHTED TO ACKNOWLEDGE THE REALITY OF THIS OP-ED AND "SIGN ON" TO THE SOLUTIONS PROPOSED.

Unfortunately, rather than getting consumers more engaged in their health care decisions, Congress appears ready to move in the other direction.

The president actually denounced high-deductible insurance and greater consumer cost sharing as "not real insurance."

Both the House and Senate versions of health reform reduce co-payments and all but eliminate policies with high-deductibles; no co-payments at all are allowed for a wide variety of broadly-defined "preventive" services.

The consumer share of health spending will actually decline to just ten cents of every dollar by 2019.

This all but guarantees that health care costs and spending will continue their unsustainable path. And that is a path leading to more debt, higher taxes, fewer jobs and a reduced standard of living for all Americans.

Health care reform cannot just be about giving more stuff to more people. It should be about actually "reforming" the system. That means scrapping the current bills, and crafting the type of reform that makes consumers responsible for their health care decisions.

March 1, 2010 at 1:15 PM
William R. Barker said...

http://www.house.gov/htbin/blog_inc?BLOG,tx14_paul,blog,999,All,Item%20not%20found,ID=100301_3656,TEMPLATE=postingdetail.shtml

[By Dr. Ron Paul. R-TX]

[W]hen so many are out of work...[and those] who are working live with the fear of losing their jobs as they struggle to pay bills...Washington is talking of increasing their taxes, something voters were promised, clearly and adamantly, would not happen in this administration.

Government also struggles with money, but the struggle centers on how to get more of your money into government coffers.

Rather than expanding the Federal budget in the face of economic downturn, we should be focusing on eliminating waste and being the very best stewards of public funds that we can possibly be. Most businesses have had to streamline and cut back in order to survive, and so it is only fair for our government to do the same.

Instead, the State Department is building a $1 billion embassy in London, the most expensive ever built. The plans even include surrounding it with a moat! I asked the Secretary of State about this massive expenditure, and she claimed the funds for this were coming from the sale of other properties. If money can be saved, then save it! Don’t spend it on such an extravagant structure overseas when people back home can’t find jobs or pay bills.

[T]he administration has committed to doubling foreign aid. That is one promise that is likely to be kept, despite our economic crisis.

I asked Chairman Bernanke about Federal Reserve agreements with foreign central banks and if he had had any conversations about bailing out Greece, which he flatly denied. However, he recently announced that the Federal Reserve will be looking into Goldman Sachs’ derivative agreements with Greece. Goldman Sachs, as we know, has “too big to fail” status with the Fed, so it is conceivable that any Greece-related catastrophic losses at Goldman Sachs will once again be passed on to taxpayers.

March 1, 2010 at 1:15 PM
William R. Barker said...

http://spectator.org/archives/2010/03/01/tilting-at-windmills

You know the saying: Ignorance is bliss.

Unfortunately for the American taxpayer, when it comes to the wind turbine industry, ignorance is not as blissful as it is infuriating.

According to a new report by the Investigative Reporting Workshop (in coordination with ABC's World News with Diane Sawyer and the Watchdog Institute), Obama can now add wind turbines to his growing list of failures within the stimulus package.

$2.1 billion in stimulus grants have been given to wind, solar and geothermal companies to make good on Obama's ["green"] objective but almost 80% of those went to foreign companies. A bankrupt Australian company nabbed the largest grant so far - $178 million. With that, Babcock & Brown built "a Texas wind farm using turbines made by a Japanese company."

March 1, 2010 at 4:46 PM
William R. Barker said...

http://www.cumber.com/commentary.aspx?file=022610.asp

“Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will reach the end of their terms. Nearly half are at present “underwater” – that is, the borrower owes more than the underlying property is currently worth.

Commercial property values have fallen more than 40 percent since the beginning of 2007. Increased vacancy rates, which now range from eight percent for multifamily housing to 18 percent for office buildings, and falling rents, which have declined 40 percent for office space and 33 percent for retail space, have exerted a powerful downward pressure on the value of commercial properties.

“The largest commercial real estate loan losses are projected for 2011 and beyond; losses at banks alone could range as high as $200-$300 billion.

http://economix.blogs.nytimes.com/2010/02/23/when-states-become-dependent-on-federal-aid/#more-53245

Last week, the Department of Health and Human Services gave another $4.3 billion to state governments “by reducing the amount they will have to pay the federal government to offset the cost of Medicare coverage for prescription drugs.”

* OF COURSE SINCE DHS IS PART OF A FEDERAL GOVERNMENT WHICH IS IN PERMANENT DEFICIT MODE THIS MEANS ANOTHER $4.3 BILLION OF DEBT - DEBT AT INTEREST.

This style of transfer, where the federal government allocates unrestricted money to states by changing the health care reimbursement rules, has become a regular feature of [federal policy].

In Massachusetts, for example, Gov. Deval Patrick’s plan to balance the state budget depends on his “ongoing advocacy and anticipated success in helping to secure the expected enactment of a six-month extension of enhanced federal matching relief as part of pending federal legislation.” In other words, he’s going to ask Washington for more money.

[S]ome very large, very wealthy states seem to be acting particularly irresponsibly, possibly in the hope that the feds will ride in and solve all their problems.

* AGAIN... THE FEDS HAVE NO MONEY TO "RIDE IN." FEDERAL LARGESS IS DEBT DRIVEN - DEBTS UPON OUR SHOULDERS AS CITIZENS.

[H]andling state budget shortfalls with federal bequests creates all manner of oddities. Every one of the five least dense states in the country has been awarded $948 per capita or more in recovery funds...while New York has been awarded $567 per capita...

* ADDING INSULT TO INJURY; OR RATHER... MORE INJURY TO THE ORIGINAL INJURY.

(*SMIRK*)

March 1, 2010 at 4:46 PM
William R. Barker said...

http://www.ocregister.com/opinion/state-236548-make-budget.html

[California] Democrats, who are loathe to reduce any government spending, have decided to wait for things to improve, rather than make the severe reductions necessary to compensate for a projected $19.9 billion budget deficit through mid-2011.

Of course, a more prudent way to approach this would be to make necessary cuts today so those relying on the money have time to adjust for tomorrow. If conditions improve, funding could be restored, or bonded debt paid down or even a rainy day reserve added for the next crisis.

[That idiot Schwarzenegger's] proposed budget once again is based on accounting gimmicks and hoped-for billions from Washington unlikely to materialize.

Meanwhile, the Legislature's unwillingness to make necessary spending cuts and political obstacles to ramming through substantial new taxes will bring lawmakers to a familiar place as summer nears. They are likely to face another multi-billion deficit and miss another constitutional deadline on June 30 for adopting a balanced budget.

March 1, 2010 at 4:46 PM
William R. Barker said...

http://blog.nj.com/njv_editorial_page/2010/02/post_7.html

In November, when Marlboro [NJ] teachers refused to contribute a nickel toward their skyrocketing health care premiums, the board of education stood its ground and was applauded statewide for not buckling. Taxpayers hoped this would be a rare occasion when a school board went nose-to-nose with a union and didn’t get body-slammed.

Two months later, the board caved.

Marlboro teachers still contribute nothing on health care. They will get 23% raises spread out over five years. And now they qualify for family coverage in the first year, ending the previous three-year wait.

This year, in the middle of a punishing recession — when more than 10% of New Jerseyans are out of work, when others are having their pay and hours cut, when many are losing homes to foreclosure — teachers’ average base salaries rose by nearly 5%, double the rate of inflation.

We can’t afford this. Taxes are too high as it is, and we face a mountain of unpaid pension bills. If we were a private company, we’d be General Motors.

So it’s time to go nuclear. It’s time to rewrite the rules. It’s time for the showdown with unions that has been brewing for years.

The first step is to freeze public-worker salaries — state, local, and school — for at least one year. Some of that can be done immediately by law. Some of it will take time because we can’t break contracts unilaterally.

Step two...is to use that one-year breather to rewrite the bargaining rules with taxpayers in mind.

Municipalities and school boards have proven unable to hold the line, so it’s time to take negotiating power away from them. The best answer is for the state to take over contract negotiations on a regional basis. The Legislature also could place a cap on annual increases in labor costs, by law. With that, a long-term fix will be in place.

Unions will treat this as a life-and-death fight. They will spend millions on radio and TV ads and bumper stickers. They will mobilize lobbyists. They will activate their fleets of volunteers. The unions will argue this drive amounts to an assault on police officers, firefighters, teachers, and social workers. Don’t fall for that.

We all have known public workers who are dedicated, sometimes heroic. They have our gratitude. ... But we can’t afford these spiraling costs. It’s that simple.

March 1, 2010 at 4:47 PM
William R. Barker said...

http://www.forbes.com/2010/02/25/democratic-states-bad-financial-shape-personal-finance-blue.html

Want to know which states are in the worst financial condition? One telling indicator that might not immediately come to mind is whether most of its citizens identify themselves as Democrats.

The five states in the worst financial condition - Illinois, New York, Connecticut, California and New Jersey - are all among the bluest of blue states.

The five most fiscally fit states are more of a mix. Three - Utah, Nebraska and Texas - boast Republican majorities; two - New Hampshire and Virginia - skew Democratic.

Why do Democratic states appear to be struggling more than Republican ones? It comes down to stronger unions and a larger appetite for public programs...

Of the 10 states in the worst financial condition, eight are defined by Gallup as "solidly Democratic," meaning the Democrats enjoy an advantage of 10 percentage points or greater in party affiliation. These states include the ones listed above as making up the bottom five, plus Massachusetts, Ohio and Wisconsin.

Of the three other basement-dwellers, Kentucky is defined as "leaning Democratic" (a five- to 10-percentage-point Democratic advantage) and the remaining two - Louisiana and Mississippi - are termed politically "Competitive" (less than a five-percentage-point advantage for either party). Louisiana tilts slightly Democratic and Mississippi slightly Republican.

The majority Republican states ranked among the financially healthiest are Utah, Nebraska, Texas, North Dakota and Montana. All told, seven of the 10 most Republican states rank in the top half in terms of fiscal fitness.

Utah, the fiscally fittest state, has debt of just $442 and unfunded pension obligations of $7,272 per resident. It is also America's second reddest state with a 21-percentage-point Republican advantage in party affiliation. The Beehive state boasts a triple-A credit rating from Moody's.

Illinois is in the worst financial condition, with per-capita debt of $1,877 and unfunded pensions of $17,230. Moody's rates Illinois' general obligation debt A1, ahead of only California's.

March 1, 2010 at 4:47 PM
William R. Barker said...

http://www.thedailybeast.com/blogs-and-stories/2010-03-01/the-scandal-that-could-doom-the-democrats/full/

The son of a maid, [Congressman Charlie Rangel, D-NY] went to work at age 8, won a Purple Heart in Korea, and rose through the Harlem Democratic machine.

He has "taken care of the little guy," assiduously bringing home federal bucks to his...district. Rangel has taken care of himself as well, using rent-controlled apartments given to him by a Manhattan developer,and failing to pay income tax on a three-bedroom villa in the Dominican Republic.

[C]ongressmen violate ethics rules all the time. But when independents get in one of their sour moods, these infractions become matches on dry tinder. In 1994, the scandals concerning [Congressman Dan] Rostenkowski [D-IL] and the House bank helped sweep the Gingrichites into power.

In 2006, according to exit polls, the scandals surrounding mega-lobbyist Jack Abramoff and Rep. Mark Foley [R-FL] did more to lose the GOP control of Congress than did the Iraq war.

[Nancy] Pelosi [D-CA] became Speaker, in fact, by running against the GOP’s “culture of corruption” and promising the “most ethical Congress in history.”

(*SNORT*)

Nancy Pelosi is protecting Rep. Charles Rangel...

(*SHRUG*)

March 1, 2010 at 4:47 PM
William R. Barker said...

http://business.timesonline.co.uk/tol/business/columnists/article7043772.ece

[C]onsumer confidence is plunging — it is at its lowest level in 27 years. Add to this banks that don’t want to lend, businesses that are reluctant to hire, and an anti-business government, and there is reason enough for worry.

Any hope for an export-led recovery seems to be receding as European growth stalls, several countries are being forced to impose austerity programmes, and turmoil in the market for sovereign debt drives interest rates higher.

Even China, long seen as a huge potential market for American products, is reining in credit to cool the economy, and persists with policies that discourage imports.

March 1, 2010 at 4:48 PM

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