Coyote Blog

Hospitals are required to treat everyone who shows up at the door, which results in a substantial amount of uncompensated care that hospitals must spread into their rate structure for other patients (and which also gives the lie to the syllogism that being uninsured means one does not have access to health care).

Supposedly, the PPACA was going to eliminate all these costs.  Actually, it does not eliminate these costs, it just changes who subsidizes them.  Currently, other hospital patients (and their insurers) subsidize this care.  In the PPACA medicaid expansion, some of this subsidy would shift to taxpayers  (whether the actual amount of costs subsidized would go up or down depends on your assumptions as to whether the Feds or the hospitals are better at managing them).

But hospitals think they might have found a third approach.  By law, insurance companies cannot legally turn down any applicants, particularly through the exchanges, based on their health condition.  So why not have the hospital (or its non-profit Foundation) buy policies for its perennially most expensive uncompensated patients?

US hospitals are exploring ways to buy “Obamacare” insurance plans for their sickest and poorest patients as they strain under the weight of tens of billions of dollars in uncompensated costs from the uninsured.

...The controversy is another reminder of the complexity of the US healthcare system, where hospitals are forced to pay about $40bn a year in so-called “uncompensated care”. People who are not insured go to emergency rooms because they cannot legally be turned away, and often hospitals bear the brunt of the costs.

“Hospitals are considering it,” says Mindy Hatton, general counsel of the American Hospital Association, the hospital lobby group. “Hospitals shouldn’t be on the front lines delivering preventive care that patients should be receiving in a clinic or doctor’s office. That doesn’t make sense for anyone.”

This is insurance companies' worst nightmare, of course.  It would not take very much of this sort of thing to trash the whole insurance market.

The Administration response to all this has been typical of its behavior through the whole PPACA implementation.  In general their approach to all new problems has been to:

1. Make it clear that it hadn't really thought very deeply or completely about important implementation issues
2. Make snap implementation decisions to tactically deal with one problem only to find they had created new problems
3. When everything gets really messy, claim broad dictat-by-press-release powers it is not clear the law actually gives them

In this case, the Administration was faced with questions from Representative Jim McDermott.  He asked if exchange-sold health plans were considered Federal Qualified Health Plans (QHP) under the law.  If so, he pointed out that several of the things the Administration had discussed (e.g. allowing insurers to offer monetary inducements to customers who maintained good health habits) could be illegal under anti-kickback provisions.

As usual, it was pretty clear the Administration had no answer.  Or more accurately, had five different answers from five different people and agencies.  Kathleen Sebelius wrote back to McDermott that no, exchange sold plans were not QHP's and so the anti-kickback law did not apply.  This tactically solved McDermott's issue.  But it created large new issues, since it is the anti-kickback law that would have prevented hospitals from buying exchange plans for their most expensive patients.  If exchange plans are not QHP's, then hospitals considered that buying such plans was now legal.

All Sebelius has been able to do to temporarily quiet this mess has been to claim vague and unlimited powers to regulate virtually any behavior related to the exchanges.  Like Obama, she believes her press releases have force of law.  But in fact, even if she does have the claimed regulatory power, she actually has to go through a rules-writing process before any such rules can take effect.   These are structured, drawn out affairs with long delays for public comment.  This is the type of thing she needed to be doing 18 months ago.

...is get elected.  That's it.  It's the only thing they have to do well, really, to have their jobs.  Name one other thing President Obama is good at?

Here are Obama's polling numbers over the last couple of years (approve is black, disapprove is red).  Note the fair to middling muddled approval rating for most of the period.  The numbers never crack 50 ... EXCEPT for the days leading up to the last Presidential election, and then he managed put in place a full court press to get his popularity up just high enough and just long enough to get elected.

Over at Forbes, I wrote this week about Bitcoin mining.  But don't be immediately put off.  This is not yet another article by a crazed libertarian and Cryptonomicon fan on the miracle effects of digital currencies.  Instead, I look at the crazy economics and absurdly steep capacity and technology curves of Bitcoin mining.  An excerpt:

Let’t take an example, and consider the Cointerra TerraMiner IV, a 2TH/sec machine priced at about $6000 which if purchased today would be delivered sometime in February, or about 3 months from now.  At current difficulties and exchange rates, such a machine would pay back its purchase price in less than a week, producing over $25,000 a month in Bitcoins.

A no-brainer, right?  But Bitcoin mining difficulty has been going up of late by a factor of 10 every 3 months.  Based on a mining difficulty ten times greater than today and current exchange rates, we could expect instead to be making at delivery something more like $575 a week.   Three months later we would be making a tenth of that.  If we factor in the costs of electricity, this machine will never cover its costs at current Bitcoin exchange rates.

I do not think I have ever seen a business technology obsoleted so quickly.  Essentially, the next generation of mining processors will be virtually obsoleted between the time of its sale and its delivery 3 months later.  Every three months one has to reduce his production costs by a factor of 10, in a business where cost reduction basically means throwing out all one’s existing capital assets and buying expensive new stuff.

Got this from some Republican group (the "virtue" of being a libertarian is that I get bipartisan spam).

Tim Bishop = ObamaCare 

Bishop Has Been a Co-Conspirator in the Disaster That is ObamaCare; It’s Time for Him to Apologize For This Colossal and Expensive Mistake 

WASHINGTON – Today, in a rambling press conference, President Obama admitted he “fumbled” the ObamaCare rollout. And the president even warned of more problems to come.

Tim Bishop has been a vocal ObamaCare supporter from the beginning—voting for the bill in 2010 and giving the president a blank check on ObamaCare time and time again. Now that the law is becoming more of a disaster every day, Bishop needs to answer for the higher premiums and canceled plans facing families in his district.

Didn't even know who this dude was until I checked (US Representative from NY, apparently).  I expect to see a lot of this.  At least for now.  Things can change quickly.  After all, just 30 days ago the Republicans were supposedly on the ropes from self-inflicted wounds vis a vis the shutdown.  Now, no one even remembers it.

I have not seen anyone notice this yet, but perhaps it is just because I have obsessed over the pathetically bad Commonwealth Fund survey whose findings were demolished by the numbers in the October report (here and here).  Well, it turns out, the October report actually proudly highlights the Commonwealth Funds report,  and quotes this line from the Commonwealth Fund in Appendix D:

Of those who have visited the Marketplace, 21 percent enrolled in a plan.

WTF are you doing including this survey finding in a report that essentially makes a laughing stock of this very finding?  Let's review what numbers we have in the October report:

• From our chart here, the people covered by a "clicked" plan (sorry, but that is their circumlocution, not mine) were 106,185  (note this is generous because it is not actual enrollments, which will be less)
• From the same chart, the people who were found eligible for Medicaid were 396, 261 (note this is generous as this is not actual enrollments, which will be less).
• Finally, from the same source are total web visitors times 1.78  family members per visitor (to make our ratio apples to apples) of 47,840,217.  See here for further explanation of why this calculation is necessary

This gives us a percentage of web visitors of 1% that managed to do something kindof sortof close to enrollment.

This demonstrates just how insane the 21% figure is from the deeply flawed Commonwealth study.  So why in the hell is the Obama Administration quoting it as authoritative in their report?  Do they think anyone is dumb enough to use the 21% figure instead of the 1% figure?  Is this just providing ammunition to political hacks who want to spin the story in Obama's favor?  Did the Administration or possibly OFA actually pay for that study?

The only effect including that 21% number has on me is to say that Obama likely has a bigger problem -- If 21% of visitors THINK they enrolled and less than 1% actually did so, aren't a lot of people in for a rude shock?

I did not want this to get lost -- in an Enrollment report that used the word "enroll" or some variant 229 times, the one thing the report was missing was the actual number of people who had enrolled.  On the Medicaid side, the report said how many had been found eligible but not how many had enrolled.  On the private side, the best we get is this, which is just a classic of the political art:

106,185 (10 percent) of the 1,081,592 total Marketplace plan eligible persons have already selected a plan by clicking a button on the website page.

The obvious language would have been "106,185 enrolled in a plan" or "bought a plan."  But it does not say this, despite the fact that the Obama Administration certainly has the relevant number.  What this means is that 106,185 people ... OK, a quick aside.  It is not actually 106,185 people being successful on the web.  This is the number of people who would be covered in plans "clicked on" by visitors.  The total number of clicks is well under this -- likely something like 60,000, if the ration of 1.78 persons per application holds from the other numbers in the report.  So this is the number of people covered in something like 60,000 plans that visitors did the equivalent of putting in the online shopping cart but may not yet have paid for.

Well, maybe the number paid is really close to 106,185.  Hah!  I can disprove that quite simply:  We were not told the number.  QED it sucks.

Well, so much for the implicit gag order Obama has had on the insurance companies.  Bet we will find out a lot more interesting details about the exchange rollouts now.

[T]he White House has its own idea to stop the bleeding: Allow insurers to renew existing plans in 2014 (which means they could continue into 2015) while forcing them to send Landrieu-like letters explaining why their plans don’t conform to the Affordable Care Act’s standards.

This doesn’t really ensure anyone can actually keep their plan — which means it also doesn’t affect premiums in the exchanges. But it makes it easier for Democrats to blame insurers for canceling these plans. And it perhaps makes it easier for the White House to stop congressional Democrats from signing onto something like Landrieu or Udall.

The insurance industry is furious. They’ve been working with the White House to get HealthCare.Gov up and running and they’ve been devoting countless man hours to dealing with the problems and they’ve been taking the heat from their customers over canceled plans, and now the Obama administration wants to make them into a scapegoat.

“This doesn’t change anything other than force insurers to be the political flack jackets for the administration,” an insurance industry insider told Evan McMorris-Santoro. “So now, when we don’t offer these policies, the White House can say it’s the insurers doing this and not being flexible.”

This is like telling GE to reintroduce 100 watt lightbulbs on thirty days notice, and then blaming them if they don't do it.  Or as I tweeted earlier,

Obama telling insurers they can reinstate plans is like my wife telling me to take the exit we passed two miles ago @instapundit @mfcannon

— Coyoteblog (@Coyoteblog) November 14, 2013

 Update:  Left rallying around Obama, spreading the word that cancellations are all the insurance companies' fault.  I am SO glad I am not affiliated with a political party such that I would feel the need to embarrass myself to support some flailing politician on my team.

The Left has been calling cancelled policies "sub-standard" for months now.  For three years Obama's own folks were estimating that over half of individual policies would have to be cancelled due to the law, and in fact they purposely wrote the regulations narrower to invalidate the maximum number of policies.  But now cancellations are the insurance companies' fault??

Via the WSJ:

President Barack Obama said Thursday that insurers will be able to continue health-insurance coverage next year for current policy holders that otherwise would be canceled under the new health-care law....

"Insurers can offer consumers the option to renew their 2013 health plans in 2014 without change, allowing these individuals to keep their plans," a senior White House official said, previewing Mr. Obama's announcement. These consumers will be given the opportunity to re-enroll, the official said, essentially extending the so-called grandfather clause in the 2010 health overhaul that allowed people to keep their plans if they were in place before the law passed.

"This step today is in the interest of fixing some of the challenges that have arisen" since then, the official said.

Under the plan, insurers are required to notify consumers whether their renewed plans don't include coverage that was required under the new health law, which set minimum coverage standards. They must tell consumers that new insurance options and possibly tax subsidies may be available for policies bought through online federal marketplace.

1.  The President announced this today to try to head off Congressional legislation to do the same thing.  Have we just given up on the rule of law?  Can the President unilaterally modify any law he pleases?  Shouldn't a modification in existing legislation have to come from the Legislature?  Can we just make it official and change the Constitution to say that the President can alter any legislation he wants as long as his party originally passed it?

2.  How is this even going to be possible?   My understanding is that insurance companies spend months preparing the pricing and features of their products for the next year.  The have done no preparation to offer these plans in 2014, because, you know, they were (and still are, whatever the President says in a news conference) illegal.   Its like your wife telling you to take the next exit when you are in the left lane driving 75 miles an hour in heavy traffic and the exit is about 100 yards away.  With 31 business days between now and the new year, how are they supposed to do this?  Or are they even expected to be able to do so?  Is this the President's way to blame shift to insurance companies?

Update:

Insurance source: WH fix places "onus on us even tho they know we can't" effectively extend cancelled policies given rates/logistics probs

— John Harwood (@JohnJHarwood) November 14, 2013

More from insurance industry source on WH O-care fix: "This is a joke - doesn't change anything but allow WH to blame insurance companies"

— John Harwood (@JohnJHarwood) November 14, 2013

So the October exchange data is out and the report is a bit hard to follow, in part because it dodges and weaves trying to put the best face on things.  Fortunately, I have years of experience as a corporate planner digging into numbers from division heads trying to disguise what a train wreck their results are.  So here are the numbers in a simple graphical form (click to enlarge)

Here is a simple narrative following these numbers: The exchange web sites had 26,876,527 visitors representing 47,840,217 estimated potential insured persons.  Of these, 846,184 applications have been completed covering 1,509,883 persons, of which applications covering 1,477,853 persons have been processed by the government to test eligibility.  Of these reviewed applications, 396,261 persons were eligible for Medicare or some other free program while the rest needed private coverage.  Of these, about a third were deemed eligible for a subsidy.   About 10% of those people eligible for private coverage have put a plan in their shopping cart, though it is unknown how many are subsidized and how many are not.  An unknown number have actually purchased insurance.  An unknown number of Medicaid eligible people actually have enrolled.

There are some real problems with the report's presentation.  Here are the worse issues:

• They switch back and forth between applications and persons covered by applications (which is about 1.78 persons per app.)   This is presumably a bid to make the numbers as large as possible.  All the numbers above the first one in the chart above are persons covered by applications, not applications.  As you can see, I have converted the web site visitors to this same basis so we can get an apples to apples sales funnel.  Note that this means the 106,185 number for people who have "chosen a plan" is actually a lot fewer applications, perhaps less than 60,000.
• They leave out the three numbers any reasonable person would most want to see.  How many people actually signed up and (if appropriate) paid for coverage?  Those numbers are completely missing.   How many Medicaid eligible people actually enrolled? How many of the 106,185 people covered by a plan in a shopping cart actually paid  (the shopping cart abandonment rate at private websites is about 2/3, if I remember correctly)?  And how much did these enrollments cost the taxpayer in terms of subsidies?

As bad as this report is for the administration, the truth is actually worse, as they have assiduously avoided including the numbers a reasonable person would want to see.  Without any other evidence, I have to assume that these obvious numbers were left on on purpose because they were awful.

A while back, I pointed out this poll from some group called the Commonwealth Fund.  In mid-October, on average about 15-18 days into the exchange process, they polled a group of non-corporate-insured adults (e.g. individual market or uninsured) about whether they had visited an exchange and what had been their experience.

The finding that stood out to me was that 21% of the people they interviewed that said they had visited an exchange reported that they had signed up for a policy (from the wording of the question, this probably includes both private policies and Medicaid signups).

I thought this seemed crazy-high.  And now new data from the Administration is confirming it.   The Administration is reporting about 106,000 "selected a plan" in October -- a very generous definition since it includes people who put a plan in their shopping cart but did not purchase it.  Not a definition of a sale that Amazon.com would ever use.    Further, another 400,000 or so were "found eligible" for Medicaid, whatever that means though it sounds well short of "enrolled."  So call it generously 500,000 people by the end of October.  The other key bit we need is that the Administration is reporting about 27 million unique visitors to these sites.  So at best we are looking at 1.9% of exchange visitors kind-of-sort-of-maybe having done something that approaches being enrolled.

This puts the Commonwealth Fund polling an entire order of magnitude off, at 21% vs. 1.9%.  And remember their survey occurred in the middle of the month, when the web site was not even working, and one can assume that successful enrollments were back-end loaded in the month.  The CF was nice enough to respond to my emails but were unable to explain the discrepancy, other than the sample size was low making the results unreliable.  So why the hell do it, and then put out a press release?

One explanation for part of the discrepancy may be in those who have created user accounts (normally a trivial task on a private site but a Herculean accomplishment on Healthcare.gov) but have not actually purchased a plan.  The Obama Administration says that there are about a million of these, so in addition to the 1.9% that put a plan in their shopping cart, there are another 3.7% that created a user account and gave the Feds enough info to assess subsidy eligibility, but who have not selected a plan.  Remember, that this was the minimum hurdle the Obama Administration originally set even to see insurance plan prices, and is still the minimum hurdle to get a subsidy quote.  It will be interesting to see the conversion rate of people once they find they are not getting free stuff from Uncle Sugar.

Even so, this only adds up to 5.6% of people who visited the exchange and had any sort of success (in most cases far short of enrollment) at all.  Way short of 21%.  Remember that we you see "studies" like this in the future.

Richard Cohen wrote in the Washington Post

"[p]eople with conventional views must repress a gag reflex when considering the mayor-elect of New York — a white man married to a black woman and with two biracial children,"

Apparently people responded to the article by saying that Cohen was as a minimum deeply out of touch and perhaps a tad bigoted himself.  Of course, since this is the Internet age, some folks said these things in juvenile and deeply unproductive ways.

I am not going to comment much on his original statement.  I think the article is far more revealing of Mr. Cohen's mental outlook than that of anyone in Iowa, particularly since he brought no facts to the table, but a lot of people have already pointed that out.  I wanted to comment on his follow-up statement

I don’t understand it …. What I was doing was expressing not my own views but those of extreme right-wing Republican tea party people. I don’t have a problem with interracial marriage or same-sex marriage. In fact, I exult in them. It’s a slander…

Seriously?  So people's opinions about actual statements made by Richard Cohen in writing are slander, but ugly accusations made about Republicans or Tea Partiers he has not even met are not?  At least his critics are working with his actual statements, rather than offering an opinion of a large, inhomogeneous group's state of mind as fact.

He added, “I think it’s reprehensible to say that because you disagree with something that you should fire me. That’s what totalitarians do.”

Yeah, because totalitarians never broad brush vilify whole groups who constitute their political opponents.

This is a great example of how ad hominem argumentation works.  The Left has spent a lot of time attempting to vilify the Tea Party as flat-out BAD PEOPLE, in a similar way to how we climate skeptics have been vilified.  Once one is successful at this, then all the rules of discourse don't apply.   You don't have to engage them or treat them seriously because they are BAD PEOPLE.   We good liberal-minded folks would never stereotype large groups, except of course the Tea Party but that is OK because they are BAD PEOPLE.  And everyone knows that the rule of law, much less the rules of normal discourse, do not apply to BAD PEOPLE.

The Feds are claiming they know of at least one Denial of Service (DOS) attack on the Obamacare exchange.  Talk about irrelevant.   This is a site that crashes under the onslaught of about a dozen regular users.  A DOS attack could be executed by me and three of my friends just by trying to log on and create accounts.  First day exchange visitors are guilty of an unwitting DDOS attack just for navigating to the site.

I was just thinking this morning that it would have been a funny Onion article to show some average schlub with a headline that Joe Smith was being accused of a DOS attack for visiting the exchange on October 1.

I had fun photoshopping (here, here) the first batch of these ads.  But now they seem to have entered the realm of self-parody, so here are some of the actual ads, without modification (source).

As a libertarian, I have no desire to grade the choices they are making.  I just don't want to subsidize them, though this seems to be the proud message of the ad campaign:  "Obamacare subsidizes bad choices and dangerous behavior".

This has to be one of the more bizarre moments in the history of insurance.  Never before has any insurance company likely ran ad campaigns aimed at attracting the worst risks.  The irony of course is that President Obama needs to sell this to young people precisely because most of them won't use it.

One of the transitions English speakers have to make in Romance languages, and I have found particularly in Italian, is that the object of the sentence that we so often put at the end ends up at the beginning of sentences.  For example, in Italian, when translating the phrase "I can show it to you", the "to you" and "it" end up as the first two syllables ahead of everything else.

I was working on this just yesterday in my Italian lesson so I got a laugh out of XKCD

This is a little dated, but Ken White has a mega-update on the Prenda Law case he has been following.

The ins and outs of this case are complicated beyond belief (likely purposefully by the key players in a bid to obfuscate what they were doing), but the basic facts appear to point to this:  Prenda and a series of related entities were buying copyrights to porn, uploading electronic versions of these videos to known pirating sites, and then suing folks who downloaded the files  (knowing that most folks, embarrassed that they downloaded "Chubby Nurses in Heat" or whatever, will fold and pay a settlement rather than get in a public legal fight).  One reason for the complexity and obfuscation is that the porn companies (AF holdings and many other shells) have to pretend on the one hand that they didn't upload the files themselves in a "honeypot" operation, and on the other hand that they have no relation to Prenda Law.  By the way, the scheme apparently brought in about $2 million in 2012 alone of which at least two thirds, and likely more, ended up in the pockets of the key principles.

What makes the case so fun to read about is the just idiotic antics and evasions by the key players, the hapless lawyers, the "dog ate my homework" excuses in front of senior Federal judges, etc.   All this combined with an arrogance among the principles that could be a case study in the Wikipedia entry on Dunning-Kruger effect.   The bad guys remind me of nothing so much as the William Macy character in Fargo.   This, for example, is a hilarious article with examples of one principle after another offering absurd testimony to various Courts.

Since the post above, Ken has an update here.

Master Resource looks at the California Valley Solar Ranch

In a realistic appraisal of the CVSR we should note the following:

· An investment of $1.6 billion 250 MW breaks down to an extravagant $6,400,000 per megawatt.

· The Solar Ranch covers 1,500 acres.

· The CVSR is projected to produce 482,000 MWh per year, implying an operating capacity factor of around 22%.

· Given a reasonable appraisal of the value of 482,000 MWh per year, it is not possible that the solar panels will be able to provide a return sufficient to pay back the $1.6 billion investment within their functional life (not even close), even when ignoring annual operating and maintenance costs. Hundreds of millions of dollars will be lost (see Updated CSVR Cash Flow).

....

A much more viable alternative to a solar generation facility, although not the only one, is a plant using natural gas. A natural gas combined cycle gas turbine (CCGT) facility capable of 250 MW would have required less than one-fourth the capital investment, would be capable of making four times the electricity per year at 88% capacity factor, and would fit on a single acre.

Also, a CCGT facility could have been located closer to the point(s) of actual use of the electricity, and could provide dispatchable energy which could be increased or decreased as demand fluctuates; something the solar facility is incapable of providing.

So why is this project even happening?  Because most of the project was funded by a taxpayer-gauranteed loan.  And then many of the players got direct subsidies and tax breaks.  And finally the electricity from the project gets bought at an above-market subsidized rate.

Forget the #DIV/0! PE.  That prices the company at over 57 times annual revenues.

Or so I am led to believe by the fine folks in Deming, New Mexico, who forced a man to undergo two forced X-rays, two anal probes, three enemas, and a colonoscopy under anesthesia because they worried that he might be hiding a smidge of illegal narcotics in his nether regions.  Oh, and they made him pay the hospital bills for these procedures as well, sort of like billing someone's estate for the electricity used to execute them in the electric chair.

Details here.

Update:  Orin Kerr has a legal anal-ysis of the case (sorry, couldn't resist).   His conclusion seems to be that the victim may be sh*t out of luck (sorry again) in seeking compensation.  From reading it, he may even be stuck with the medical bills.  I have come to expect cops to display this kind of excessive behavior.  What is particularly disappointing is to see a doctor so eagerly cooperate and even, apparently, take the lead in escalating the intrusiveness of the search.  It is depressing that Kerr believes the doctor may well enjoy qualified immunity for his actions.  Thousands of doctors every day are successfully sued for malpractice over honest mistakes and differences in judgement, but this guy is going to walk?

Apparently, a company named "Sumpto" has adopted a business model right out of my novel BMOC (written about 7 years ago).  This is a scene where entrepreneur Preston Marsh is interviewing and trying to recruit the protagonist Susan out of business school.  They are discussing the business model of his company called BMOC.  Half of its business model was that companies paid BMOC to place their products in the hands of influential high school students.

[Marsh:] The real innovation, though is… do you know what a product placement is?”

[Susan:] “Sure. It’s when a company pays to get their product into a TV show or movie – like when Reese’s pieces were used in the movie ET or I guess if you showed Seabiscuit eating Purina Horse Chow.”

“Exactly! And product placements are particularly effective. They act like an ad but they can’t be ignored like an ad. Anyway, we have taken product placements one step further: We get paid by major manufacturers to place their products not in movies but in the hands of the most popular kids in high school, the ones who really lead opinion as to what’s cool and not cool who we…”

“Who you happen to have on retainer anyway.”

“Exactly. But be careful how you think about ‘on retainer.’ The natural reaction is to assume this means money, but in our case it’s not. We keep the most popular people on retainer merely by …”

“Giving them free products,” Susan interrupted again, with growing excitement, “that manufacturers are already paying you to put in their hands.”

This is from Sumpto's web site.  (You will have to click through, for some reason even copying it as text is crashing my site, not sure why).

Like something out of a a Neal Stephenson novel.

Just to prove that there is no end to the arrogance and moral bankruptcy of politicians:

Federal lawmakers and state officials are stepping up pressure on insurers to allow consumers whose coverage has been canceled in response to the health overhaul to keep their policies beyond the end of the year.

On Tuesday, one of the largest regional health plans in the nation, Blue Shield of California, said it would relax its stance on terminated policies for about 115,000 people after state regulators demanded it do so. Customers now will have until March to decide which plan to choose for 2014, a three-month extension. Because the newer plans generally cost more, the extension could save residents as much as $28.6 million on premiums, said Dave Jones, California's insurance commissioner....

The move by Mr. Jones, an elected Democrat, comes as some other Democrats are seeking ways to allow individual policyholders to keep their current health plans and to defuse the issue of canceled plans, which has become a headache for supporters of the law.

Cancellation letters are expected to be sent to as many as 10 million Americans who buy coverage directly from insurers, rather than through an employer or government program. While these individuals would have to buy new policies, regulators and lawmakers say the extensions would give them more time to shop for an affordable new plan—particularly because continuing problems with insurance exchange websites are preventing many of these consumers from finding new coverage.

This is incredible.  Senator Mary Landrieu, for example, has now introduced a bill that would reverse some of the rules that are forcing insurers to cancel policies, essentially the same bill she voted against 3-1/2 years ago.

Today is the anniversary of what is probably the greatest moment in Arizona sports history.  But it is also the occasion of the most precient bit of sports commentary I have ever heard.  Watch this brief clip.  Listen to Tim McCarver's comment just before the second pitch and then see what happens.  He called it exactly.

I suppose we Arizonans are biased, but the whole game is one of the best baseball games I have ever watched.  Randy Johnson relieving Curt Schilling.  Mariano Rivera relieving Roger Clemens.  You can watch it all here.

Congress is considering adding gays and lesbians to the list of protected groups covered by the EEOC.  As former chairman of a group that tried to get gay marriage legalized in Arizona (at least until we were shot down by gay rights groups that did not want libertarians or Republicans  helping to lead the effort), I hope I don't have to prove that I have no problem with differences in sexual orientation.  But I have a big problem with Federal employment discrimination law.

If you are unfamiliar with how it works, this is perhaps how you THINK it works:  An employee, who has been mistreated in a company based on clear prejudice for his or her race / gender / sexual orientation, etc. has tried to bring the problem to management's attention.  With no success via internal grievance processes, the employee turns finally to the government for help.

Ha!  If this were how it worked, I would have no problem with the law.  In reality, this is how it works:  Suddenly, as owner of the company, one finds a lawsuit or EEOC complain in his lap, generally with absolutely no warning.  In the few cases we have seen in our company, the employee never told anyone in the company about the alleged harassment, never gave me or management a chance to fix it, despite very clear policies in our employee's manuals that we don't tolerate such behavior and outlining methods for getting help.  There is nothing in EEO law that requires an employee to try to get the problem fixed via internal processes.

As a result, our company can be financially liable for allowing a discriminatory situation to exist that we could not have known about, because it happened in a one-on-one conversations and the alleged victim never reported it.

What I want is a reasonable chance to fix problems, get rid of bad supervisors, etc.  A reasonable anti-discrimination law would say that companies have to have a grievance process with such and such specifications, and that no one may sue until they have exhausted the grievance process or when there is no conforming grievance process.  If I don't fix the problem and give the employee a safe work environment, then a suit is appropriate.  The difference between this reasonable goal and the system we actually have is lawyers.  Lawyers do not want the problem to be fixed.  Lawyers want the problem to be as bad as possible and completely hidden from management so there is no chance it can be fixed before they can file a lucrative lawsuit.

I worry in particular about how this will play out with a new gay/lesbian discrimination law.  We have employed a number of gay couples over the years, and never had any particular internal issue  (I had to defend one couple in Florida from a set of customers who thought that it was inherently dangerous to employ gay people around children camping, but I did so gladly).  But I know I have employees who have religious beliefs different form my own such that they think gay people are damned, evil, whatever.  So now what do I do when I have one of these religious folks in conflict with an employee who is gay?  If I don't separate them, I am going to get sued by the gay person for a hostile work environment.  If I move the gay person, I will get sued for gay discrimination.  If I move or fire the religious person, I will get sued for religious discrimination.

I am happy to work hard to build a respectful, safe work environment, but such laws put me as a business owner in no-win situations.  And the lawyers who craft this stuff consider this a feature, not a bug.  Heads I sue you, tails I sue you.

Here is a link to the study, via Information Week.  Here is the key chart:

First, this includes people who signed up for Medicare, which is a good chunk of the state exchange signups to date.  Signing uninsured up for Medicare is meaningless, as they don't even need to be signed up to get the benefit (a hospital will enroll them if they were to come in for a visit).

Second, this is either very good news or very bad news for the Administration.

If true, which I seriously doubt, it would mean that the exchanges are a wild success.  A 21% conversion rate would be awesome even for a private retail web site, and would likely imply over a million enrollments in October.

However, there is a very good chance that in fact this is very bad news.  Since this is based on survey data, it means that 21% THINK they enrolled.  But what very well may have happened is that they eventually were successful in creating a user account, and believe that having an exchange user account means they are enrolled for insurance, which is clearly not true.

We shall see.

I was reading about the DOJ push back on the proposed American-US Airways merger.  It strikes me that you never want to be the last merger in an industry consolidation.  When the consolidation begins, say with 8 players, a merger -- even if it results in a very big company -- reduces the number of competitors from 8 to 7.  After a while, though, the later mergers are proposing to reduce the players from, say, 4 to 3.  This will look worse to the DOJ, who by this point in a consolidation may be feeling remorseful, in retrospect, that it let some of the earlier deals go unchallenged.  So the last deal gets to catch up / payback from the earlier deals.

I think this is in part what is happening with the American merger.  I don't have the data, but my sense is that earlier mergers (e.g. United and Continental) were far more problematic from an anti-trust standpoint.

Disclosure:  living in Phoenix, whose US Airways hub will likely get downsized or eliminated in the merger, my life will be worse likely if the merger is approved.   Executives swear Phoenix will remain a major hub but most residents here consider this a "If you like your hub you can keep it" type promise.