Coyote Blog

I think it is now clear why the Administration could not delay the exchanges, even when Republicans essentially cast them a lifeline during the budget debate by trying to delay the mandate by a year:  I think the Administration knew that a massive wave of insurance policy cancellations were already in the mail, and that the recipients of these letters would be facing huge price increases for their policies.

It is telling that the one thing you are NOT hearing from Administration officials in response to the policy cancellations is surprise.  If they were surprised, they would be yelling stuff like, "what the hell are those insurance companies doing?"  They knew this was coming, and you get the sense they were grimly bracing for it to be made public, hoping that perhaps their friends in the media would not make a big deal about it.

The minimum requirements on health plans that is driving these cancellations cannot at this point be cancelled.  Or, put more precisely, they could be cancelled but the act would be meaningless, because insurance companies have no way to suddenly go back to the old policies and pricing.  It takes too much planning to work out their product line and they can't just switch back on a dime.

So the huge wave of cancellations and price increases in the individual market was unstoppable.  That being said, the Administration has to be able to offer an alternative, and the only one they have is the hope one might get his or her new policy subsidized by other taxpayers.  But that is only possible through the exchanges.  So that had to be allowed to go forward and made to work, somehow.

There is no fix to this mess.  This is an avalanche that was loosed three years ago and cannot be stopped.

Via Bloomberg

The health-care law eliminates “substandard policies that don’t provide minimum services,” said Jay Carney, a White House spokesman, in response to the cancellations. The “80-plus percent” of Americans with employer plans or covered by government programs are unaffected.

I chose my policy very carefully, and don't think it is "sub-standard" because it does not include pediatric dental care for two people in their fifties.  This is the worst consumer dis-empowerment that I can remember in my lifetime.

And I totally agree with this

Now an effective levy of several thousand dollars on the small fraction of middle class Americans who buy on the individual market is not history’s great injustice. But neither does it seem like the soundest or most politically stable public policy arrangement. And to dig back into the position where I do strong disagree with Cohn’s perspective, what makes this setup potentially more perverse is that it raises rates most sharply on precisely those Americans who up until now were doing roughly what we should want more health insurance purchasers to do: Economizing, comparison shopping, avoiding paying for coverage they don’t need, and buying a level of insurance that covers them in the event of a true disaster while giving them a reason not to overspend on everyday health expenses.

If we want health inflation to stay low and health care costs to be less of an anchor on advancement, we should want more Americans making $50,000 or $60,000 or $70,000 to spend less upfront on health insurance, rather than using regulatory pressure to induce them to spend more. And seen in that light, the potential problem with Obamacare’s regulation-driven “rate shock” isn’t that it doesn’t let everyone keep their pre-existing plans. It’s that it cancels plans, and raises rates, for people who were doing their part to keep all of our costs low.

With my high deductibles, I am actually out shopping every day on health care prices and I can tell you from my experience that if everyone did so, we would see a reversal of health care inflation.  More here

more here

I try to read a couple of team-politics blogs from both the red and blue side, to stay in touch with what they are saying and stay out of an echo chamber.  Also, of course, libertarians make common cause with both parties on various issues.  But the mindless team politics angle can really be a bore.

One of the reasons I like to read Kevin Drum on the left is that his initial reactions to things often seems pretty honest.  When his side really screws up, like the IRS scandal or failing Obamacare exchanges, his initial reaction will generally be to honestly critique a bad situation.  And then about 3-5 days into the scandal or crisis or discussion of an issue, he will catch on to and adopt the party line on an issue and then become incredibly tedious (for example, on the IRS scandal, he was honestly critical for a while and then adopted the silly "leftish groups were equally targeted meme" and has stuck to it by rote since).  But at least there are those few days of honesty, which separates him from a lot of the left and right team politics blogs.

So the timing is just about right for the Left to pick a meme to explain away the millions of people who are getting their policies cancelled despite being told that they could keep their health insurance.  Mainstream outlets like CBS and NBC are pushing the story, not just right-wing and libertarian blogs, so the Ezra Klein's of the world must be working diligently to pick a meme and then enforce it.  It will be interesting to see what they choose.

Update:  Well, here is an early entrant from Valerie Jarrett:

FACT: Nothing in #Obamacare forces people out of their health plans. No change is required unless insurance companies change existing plans.

This is hilarious.  Technically true, since my cancellation came from Blue Cross and not the government, but obviously the Blue Cross decision to cancel me was forced by the terms of the law.  This is obviously absurd, but is it too absurd for the media?  I don't know, and of course it gets extra lefty bonus points for blaming government-caused problems on private businesses.  Next up, Exxon to blame for gasoline taxes!

From CBS

Obamacare forces them to drop many of their plans that don't meet the law's 10 minimum standards, including maternity care, emergency visits, mental health treatment and even pediatric dental care.

For those of you who are on corporate health plans and do not participate in the individual market, here is something that those of us who do so participate learn early:  Unless you are really, really, really adverse to the smallest unpredictability in expenses, don't buy dental coverage.

The reason is that for the vast, vast majority of people, dental costs are entirely predictable.  Let's say for the average person they are X per year.  For most people, the costs don't vary very far from X.   While certain dental procedures can be expensive (and remember, dental plans do not cover orthodonture), they are seldom if ever catastrophically expensive.  Few people have been bankrupted by an insurable dental problem.  This is particularly true in kids with pediatric dental care.

So for most people, dental insurance is just pre-paid care.  All it does is add cost.  There is no free lunch.  The insurance company knows your costs are likely to be X.  So they are going to charge you X + a markup.  Actually, it is worse than this.  Because I pay cash, I get a lower price from the dentist.  So in fact with dental insurance you are paying X + dentist insurance markup + insurance company markup.  All this does is add costs.  I have happily paid my kids' dental costs out of pocket their entire life and have saved a fortune over what 18 years of pediatric dental care would have cost.

But now, courtesy of Obamacare, we are forced by law to buy this unnecessarily expensive product.

We are going to cancel the health care policies of millions of middle class Americans, then raise their rates, and then give half of them taxpayer subsidies so it seems like they got a rate cut.

Industry experts like Larry Levitt, of the Kaiser Family Foundation, say the insurance companies have no choice. "What we're seeing now is reality coming into play," he said.

Obamacare forces them to drop many of their plans that don't meet the law's 10 minimum standards, including maternity care, emergency visits, mental health treatment and even pediatric dental care.

That means consumers have to sign on to new plans even if they don't want or need the more generous coverage. Industry experts say about half the people getting the letters will pay more -- and half will pay less, thanks to taxpayer subsidies. Levitt said, "The winners outnumber the losers here, but because of all the website problems, it's hard to find out who the winners are because they don't even know it themselves."

Millions of middle class people who were independent and paid for their own health insurance will soon be wards of the state.

Here is my health insurance cancellation letter, cancelling the insurance I was very happy with.  Click on any of the below to enlarge

Here was roughly what I was paying for a family of four (this is from the renewal 18 months ago but it is about the same now).  We had a couple of minor pre-existing conditions so this was rated up from the lowest possible price of $525.85, or about a 6.6% increase.

Here are the features of this plan.  It has a high deductible, but once the deductible is met, it covers 100% in network, and the network is very good.   The deductible amounts may be high to some.  I asked myself, "what level of unexpected medical cost could I handle in a year." and set the limits there.  It is NOT pre-paid medical care, which I do not believe in.

To the question of "was Obama lying or was he ignorant", I cannot get inside his head but I can say that many people, including me, who were not involved in the process saw this coming even in 2009 in his draft legislation.  It is hard to believe that if random folks like myself understand this, that the person actually sponsoring the legislation did not.

Many folks are arguing it has to have been an out-and-out lie.

None of this should come as a shock to the Obama administration. The law states that policies in effect as of March 23, 2010 will be “grandfathered,” meaning consumers can keep those policies even though they don’t meet requirements of the new health care law. But the Department of Health and Human Services then wrote regulations that narrowed that provision, by saying that if any part of a policy was significantly changed since that date -- the deductible, co-pay, or benefits, for example -- the policy would not be grandfathered. 

Buried in Obamacare regulations from July 2010 is an estimate that because of normal turnover in the individual insurance market, “40 to 67 percent” of customers will not be able to keep their policy. And because many policies will have been changed since the key date, “the percentage of individual market policies losing grandfather status in a given year exceeds the 40 to 67 percent range.” 

That means the administration knew that more than 40 to 67 percent of those in the individual market would not be able to keep their plans, even if they liked them.

Enter the lies:

Yet President Obama, who had promised in 2009, “if you like your health plan, you will be able to keep your health plan,” was still saying in 2012, “If [you] already have health insurance, you will keep your health insurance.”

“This says that when they made the promise, they knew half the people in this market outright couldn’t keep what they had and then they wrote the rules so that others couldn’t make it either,” said  Robert Laszewski, of Health Policy and Strategy Associates, a consultant who works for health industry firms. Laszewski estimates that 80 percent of those in the individual market will not be able to keep their current policies and will have to buy insurance that meets requirements of the new law, which generally requires a richer package of benefits than most policies today.

Next step for me, I get to experience the exchange.  I recognized a bunch of business losses last year, so my income was less than zero (I have a s-corp which passes earnings through to my individual tax statement).  It will be interesting to see if I get offered a subsidy.  Heck, they may offer to enroll me in Medicare.

If I had a stupid amount of money to spend on a home, I would not go in for the French Chateau style mansion.  This is the house I would want.  The garage has a better view than any house I expect to own.

1.  The first Obama Administration response to people (like myself) who have had their health insurance cancelled because of Obamacare and who are facing much higher future premiums is that many of can expect a subsidy.  Do you realize how awful this is?  Basically they are acknowledging that millions of people who paid for their own health care in the past will now be getting taxpayer money.  Essentially, a huge and unnecessary increase in government dependency.

2.  The other equally awful Obama Administration answer is that our new health coverage will be more expensive because it will be "better".  First, there is no evidence of this -- early returns are that people are paying more for less.  Second, though, this is horribly arrogant.  A $200,000 Maserati sedan is likely "better" than my car I am driving, but given its price I would consider myself worse off if forced to buy a Maserati.  In the same sense, forcing me to by expensive insurance options I don't want is not "better", even if I am making choices Obama's advisers would not make for themselves.  I spent a lot of time shopping for health insurance and running numbers on various cases and picking the best plan for me, and am insulted that Obama does not respect my decision.

By the way, I will remind you of what I said way back in 2007 about government health care proposals

Americans are unbelievably charitable people, to the extent that they will put up with a lot of taxation and even losses of freedoms through government coercion to help people out.

However, in nearly every other case of government-coerced charity, the main effect is "just" an increase in taxes.  Lyndon Johnson wants to embark on a futile attempt to try to provide public housing to the poor?  Our taxes go up, a lot of really bad housing is built, but at least my housing did not get any worse.  Ditto food programs -- the poor might get some moldy cheese from a warehouse, but my food did not get worse.  Ditto welfare.  Ditto social security, unemployment insurance,and work programs.

But health care is different.... what is different about many of the health care proposals on the table is that everyone, not just the poor will get this same crappy level of treatment.  It would be like a public housing program where everyone's house is torn down and every single person must move into public housing.  That is universal state-run health care.  Ten percent of America gets pulled up, 90% of America gets pulled down, possibly way down.

It is always hard to tell if the media is really offering a balanced sample of customer experiences when they pile on some company, but the Huffpo makes a pretty good case that large Wall Street home rental companies are doing a terrible job at customer service.

If so, I am unsurprised for three reasons:

• I run what is essentially a property management company.  One thing I have learned is that everyone outside of the business systematically underestimates basic maintenance and operating costs, and few if any ever factor in the costs of longer-term capital maintenance.  Further, and perhaps more critically, outsiders frequently underestimate the detailed, even minute focus on process and organization that is necessary to make sure everything is getting maintained satisfactorily  particularly when the portfolio gets larger than the executive group can personally oversee.
• I have rented out a second home for a few years.  It is difficult and expensive to stay on top of basic maintenance, and this is with one property that one is intimately familiar with.  I challenge you to find many people who will say they made money renting their second homes, particularly given the high cost of property management.  They may have made money on the appreciation of the real estate value, or reduced the net costs of owning a vacation home, but I seldom run into anyone making money on a annual basis (as long as the real cost of capital is being considered in the equation).
• Wall Street has a long history of treating operational assets as financial assets.  There is a huge mindset difference between the two.  The book Barbarians at the Gate included some early history of LBO firms like KKR, and it is interesting the culture clashes they faced as they tried to explain the need to be operationally involved in their investments to the financial guys who wanted to treat them as Deals.

One of my favorite early C64 games may be returning to mobile platforms.  M.U.L.E. would work great as a networked iPhone game.  Hopefully these folks do a good job with it.

The Arizona Republic says there is not stock market bubble.  Can't think of a better reason to sell.

Yesterday, it was problems with Obamacare exchanges.  Today, it is spying on world leaders.

11,500 Google results and growing

I am not sure why everyone thinks it would be a punishment to fire Sebelius at this point.  Three days after she is fired, she will have a handful of million dollar a year job offers from health care companies and lobbyists who want to tap her influence into this administration.  The Administration and Congress is actively picking winners and losers in 1/7 of the economy, so there are billions at stake.  Sebelius can name her price.

Instead I would love to see her stay in office three long years and answer every press question and Congressional inquiry about Obamacare, over and over and over.

My company has been sued a few times for slip and fall type stuff but I have never in my life been the plaintiff in a legal action.  As is perhaps appropriate given my political leanings, my first ever suit was against the the Federal government, specifically against the Forest Service seeking an injunction against their closure of the campgrounds we operate in the recent shutdown.

Unfortunately, the case reached the court on the day the shutdown lifted, but the judge was still very helpful in giving the Forest Service a swift kick in the butt to hurry them along so they didn't drag their feet reopening us.,

I had feared that we would lose the opportunity to set a precedent.  Since the shutdown was over I though the Court might consider this issue moot.  But apparently one can continue with such litigation to set a precedent if there is reason to think the circumstances will recur.  And the government attorney was kind enough to make a statement right in the court transcript (granted in context of a different argument) that this same shutdown situation is likely to reoccur as soon as early next year.

The good news is that we appear to have an argument that the Court is willing to entertain.  In fact, the statement below was a statement by the judge in the hearing (it's from the hearing transcript and Q&A with the government attorney and not from any official opinion).  It is not in any way binding but it gives us some confidence to try to proceed to get a ruling on the legality of our closure now, so we have it in our pocket for next time.  Here is the Court's statement, addressing the government attorney:

Well, the basic problem is that the Forest Service never should have closed these that were permitted properties.  And they in fact violated the agreement they had with these plaintiffs in doing so without necessity and determining they had a right to do so, which I don't think they did....

[the Forest Service has] nothing to do with the administration and management of the campgrounds other than the inspections at any given time.

So, what they have done is unreasonably close these parks, preventing the concessioners who pay a premium in order to get this permit and lease the property under the requirements in this permit -- and the Forest Service was very ill-advised to make the decision to close these grounds under these circumstances, where you have given up the maintenance and administration of these campsites.

I understand the overall obligation for public safety, but you have delegated that to private entities.  And you took it away when it wasn't costing you a dollar to leave it as was.  And in fact, that's where  we get into the restraint of trade and the fact that there are losses which are most likely uncompensatable.

 

By the way the case was National Forest Recreation Association et. al. vs. Tom Tidwell.  My company, among others, was al.

It turns out that the US is one of the few industrialized nations to meet the terms of the Kyoto protocols (reduce CO2 emissions to 1997 levels) despite the fact we never signed it or did anything to try to meet the goals.

Thank the recession and probably more importantly the natural gas and fracking revolution.  Fracking will do more to reduce CO2 than the entire sum of government and renewable energy projects (since a BTU from natural gas produces about half the CO2 as a BTU form coal).  Of course, environmentalists oppose fracking.  They would rather carpet the desert with taxpayer-funded solar panels and windmills than allow the private sector to solve the problem using 50-year-old technology.

If a city government cannot bring itself to end something so obviously abusive as pension spiking, what hope is there of any real reforms on tougher matters?  Government employees are increasingly running government in their own favor.

After nearly three hours of contentious debate, Phoenix city leaders were so divided over how to tackle pension “spiking” on Tuesday that they ended up doing nothing at all.

They walked into the City Council chambers prepared to make changes, but after splintering into three ideological factions, voted 5-4 against a plan to combat spiking, generally seen as the artificial inflation of a city employee’s income to boost his or her retirement benefit.

Several high-profile cases have come to light, pushing the effort to eliminate pension boosting to the forefront of the council’s agenda.

Former Phoenix City Manager David Cavazos, who retired last week to lead another city, was able to apply unused sick pay and other perks to spike his pension to an estimated $235,863, the second-largest retirement benefit in city history.

Earlier this month, a subcommittee of council members proposed modest reforms that they said would reduce pension spiking and provide transparency. They said the plan treated existing employees fairly and avoided potential litigation.

But the proposal fell apart Tuesday night, when a group of liberal-leaning council members joined the body’s fiscal conservatives in voting against it, though their rationales were vastly different.

After the motion to approve the proposal failed, the meeting ended. The result, greeted by cheers from employee unions in the crowd

Using ads from the Colorado health exchange.

This may be an elaborate hoax (the ads are that goofy) but these appear to be actual ads from the Colorado health insurance exchange.  The potential for Photoshop fund is incredible.  I took a quick shot at a couple.  Here is the original.

Update:  more here

Many folks are getting the same cancellation letter I received.  Here is more, via Maggies Farm.

On September 26 of this year, President Obama said this of the new Obamacare exchanges:

“If you’ve ever tried to buy insurance on your own,” he said, “I promise you this is a lot easier.”

Well, let's see.  Here are some notes on my previous health insurance buying decision

• I was able to price shop policies online without creating an account, without giving up my social security number.  The websites to do so worked and operated quickly

• A broker who had decades of experience in health care (rather than being a former Obama campaign worker with a few hours of training) walked me through the options and how they worked.

• Once we chose a policy, the application process online was quick and easy

Here is one thing that was likely worse

• I had to provide medical history information, which probably is not required under Obamacare because of community rating (though I am not sure)

And here is one thing that was better for me but I guess must be worse for the Left since they complain about it so much

• There was a lot more choice.  If the process was "harder" in any way before, it was because there were far more choices.  It was harder in the same way that it is generally harder to shop in the US than, say, in the old Soviet Union.  Obamacare circumscribes policies such that a large package of benefits are mandated, not optional (I have to pay for mental health coverage and probably aromatherapy) and the size of one's deductible is capped.

It is also this latter difference that will make my next policy substantially more expensive.  In standardizing options, the Congress standardized on the most expensive options (broadest possible benefits, smallest possible deductible).

By the way, this is not proven yet but there is probably one other way my Obamacare policy will be worse than my last one:  the doctor network in my policy will very likely be a LOT smaller.  We could almost be sure this would happen precisely because Obama promised it wouldn't  (his promises on health care are pretty good "tells" that the opposite will happen).

So the Flordia sales tax auditor presented her preliminary findings.  She believed that I had under-reported revenues and sales taxes by half!  Hundreds of thousands of dollars over three years.  I told her it was absolutely impossible.  No way we were off by that much.

And we were not.  It turns out that the FL sales tax report we fill out has five categories of revenue one must report in.  One is general sales.  Another is lodging.  We have revenue in both and report on both lines.  She had apparently only pulled the data from her system from the general sales line.  Total amateur hour.  Incredible.  (Several years ago there would have been a good "Bush League" pun but since the governor's office has turned over the opportunity is lost).

The other finding is that we had about 8-10 expense invoices (out of hundreds I had to pull yesterday by hand, ugghh) without any sales tax broken out on the invoice.  This may mean the vendor did not charge sales tax, or that the vendor just did not break it out.  Of course, she takes the former position, without any evidence.

This expense invoice audit is an irritating result of the "use tax" rules that states are imposing to try to make one pay tax on out of state sales.  But these were not out of state vendors, they were all Florida vendors.  I told her that if she thought they were not charging sales tax, to go audit them.  She said I had to pay.

This is absurd.  If I am found to have under-collected taxes from my customers, then I have to pay.  She is not going to go to all my campground customers and charge them back use tax.  But when I am the customer and the vendor potentially undercharges me, I have to pay as the customer?  There is no consistent rule to explain why this makes sense, except for the general rule of government that they will take money from whomever they can whenever they think they can get away with it.

My health insurance broker wrote me this in response to our telling him we got a letter from Blue Cross (BC) terminating our policy

Did  your BC letter say your policy ended 12/31/13 or 12/31/14.  If it ends in 2014 I strongly suggest you stay where you are until you are forced into Obamacare which will probably raise your rates substantially.

Given that I run a small business with fluctuating earnings, my last two years tax returns show zero net income.  If I had not honor, I probably could go into the exchange (if and when I could actually get into the exchange) and qualify for a large subsidy.  I could also probably go uncovered, and just sign up when I get sick, and pay the penalty, which is trivial if you are showing no income on your taxes.

Does anyone know if the exchanges do a net worth or asset check?  I don't see how.  If they only look at taxes, I will appear dirt poor.

Monthly job additions, taken from Kevin Drum's site, who blames this on.... austerity and the sequester.  Yes, I can't prove that the PPACA helped drive the stagnation, but the Left can't prove the austerity link either, and at least I have correlation on my side.

Blue Cross just wrote me that our current health insurance policy will not be renewable for next year.  Unfortunately, I have actual health insurance rather than pre-paid medical care (meaning that it has a high deductible and pays for catastrophic things rather than aromatherapy visits).  Kathleen Sebelius does not think what I have is "real insurance" so she and Obama have banned it, despite promising that if I like my health insurance I would be able to keep it.