Cost

Saturday, March 20, 2010



Hi,



I want to expose another side to the health care cost problem that the news does not cover and I will use a recent example of a bill I got from the hospital.

A few weeks back my wife had an emergency at 2 AM and we went to the hospital. She had an infection in her finger that got so bad during the night that we could not wait until morning.

The doctor lanced her finger and sewed it up and sent us home. The cost for this was $543. We submitted a claim to Medicare and they only approved $134 and they paid 80% of that or $107. Our Blue Cross supplement paid the other 20% so it cost us nothing out of pocket.

Now here is the point. Medicare approves such low amounts that the doctors and hospitals take a loss on serving Medicare patients and therefore they make this up by charging private insured patients more. Medicaid reimburses at even a lower rate than Medicare. There are currently 100 million people on Medicare and Medicaid and about 150 million have private health care insurance. Even though Medicare and Medicaid are passing on the bulk of their cost to the private market they are still going broke with Medicare slated for bankruptcy in 2018.

The new health care bill is going to take 500 million from Medicare and most of this will come from lowering payments to hospitals and doctors while it adds another 10 million people to Medicaid.

In this simple example if we were younger and not on Medicare and had private health insurance they would have charged $543 for this treatment and our insurance company would have paid it.

It has been estimated that if the private insurance companies did not have to subsidize the public plans their rate increases would not be more than the cost of living. As more people move to the public plans the rates charged by private plans will increase accordingly and soon they will not be able to compete. Once we have only public plans left then the government will reduce benefits to maintain cost.



Jack (John) Novick

Benefits

An incident occurred this past week that is a microcosm of a serious problem facing the country. I am referring to Senator Jim Bunning and his refusal to sign on to a jobs bill. The bill was for 15 billion dollars but he objected because it was not paid for, that is, it was just the government going further in debt. It was only a week earlier that President Obama reemphasized his commitment to the principal known as Pay Go, which he championed a few months back. The concept states that all new spending must by paid for by tax increases or budget cuts.

The interesting thing is that not many Republicans came forth to back Bunning and many Democrats condemned him for refusing to add to the employment benefits for those out of work, which is what part of the 15 billion was to used for.

Even more interesting was the press response which criticized Bunning for his hard hearted approach.

This shows that cutting benefits is not popular in congress but also meets with ire from the press, the same press that is constantly complaining about the deficits.

The bottom line is that it is better to take money from future generations and use that to pay unemployment to present day people than to withhold payment and this has been the general theme of government since WW 11.

Once benefits are started it is extremely difficult to reduce or eliminate them. Witness what is going on in Europe where they have been attempting to reduce benefits.



Jack Novick

Democracy

I was watching the American Muslim who fled to Yemen, Alwaki, on tape preaching to his converts and he said imagine living under a form of government where the majority rules. That is American and the majority can take away the rights of Muslims whenever they want. This man like many others does not understand that the United States is not a democracy but by designed is almost the opposite of a democracy. We have a Representative Republic and many Americans do not understand what that means. In a democracy the rights of the majority rule but in a Republic the right of law rules. A simple way to understand the difference is to recall justice in the old west. The posse goes after a suspect and when they catch up with him they take a vote to hang him and if the majority agrees the suspect is summarily hanged. In a Republic the sheriff arrives and takes the suspect in for trial by law. Even when the jury deliberates they must reach a unanimous decision not a majority rule. In short we have rule of law not majority rule.

Some of the confusion arises because we have elections by majority but we elect representatives who must then follow the constitution which is the law of the land. Even all the states have such constitutions and no where in the constitution or the declaration of independence is the word democracy mentioned.

Informed

It has been said that the strength of a democracy depends on an informed electorate. I would like to challenge this assertion. On most important issues of the day you can find experts, people with good formal educations, people who have spent many years studying the issue arriving at different conclusions. Not only different but many time opposite conclusions. There are a number of explanations for this but one is the way facts are collected, facts are interpreted, and facts are distorted. Most of us are familiar with the old adage that figures don’t lie but liers can figure. It is my contention, that I can use my 70 plus years of life experience, along with my God given common sense and reach conclusions that are just as accurate as these so called experts. I believe that this is the true strength of a democracy and while experts often times look upon the general population with disdain, history has shown that these ordinary citizens will generally keep the experts from going off the deep end. Other times programs are established that in and of themselves are doomed to failure although these programs may survive many years and do a lot of good while they are operating. One such program is the Savings and Loan debacle that occurred in the late 80’s. This program, designed to provide home loans and made famous with the Christmas classic, “It’s A Wonderful Life”, is one such example. These Savings and Loans, (S&L’s) were required to give long term loans (25 to 30 years) at a guaranteed interest rate while depending on income that they had to pay short term interest rates. All we have to do is envision a scenario where the long term loan rates are lower than the short term rates for an extended period of time and bingo we have a problem. If the S&L has to pay out 10% interest to attract customers and is only collecting 5% interest on its long term loans it will soon run out of money and this is just the situation that took place in the late 80”s. The government stepped in and paid hundreds of millions to failing S&L’s under the FDIC program. That’s the Federal Deposit Insurance Corporation which was set up to guarantee your bank deposits up to $100,000.

Now I will go out on a limb and predict another situation which may develop into a financial disaster. Everyday on the TV I see ads for car insurance companies each saying that their rates are lower and you should switch companies. Since these ads are so prolific I can only assume that they are getting the desired results and many people are switching. If this continues then the overall rates will decline and at some point some of these companies will find themselves in trouble. At that time will they be eligible for a bailout? Should the state insurance commissioners be stepping in before to review these rates?

Another pending problem has to do with home owners insurance. Right now your policy will cover damage to your home caused by a dirty bomb but only physical damage. If a bomb goes off some distance from your home it may not cause physical damage but because of radiation you may not be able to stay in your home but that is not covered. Now you must find another place to live and keep making payments on your home. We have a similar situation with flood insurance. For many years people who lost their homes due to flood were just out of luck but the government stepped in and offered flood insurance. My guess is we will have to wait for a terrorist to explode a dirty bomb before the government takes action and those first victims will just have to suffer.



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Unemployment

VP Biden is calling on Senator Bunning to drop his opposition to the so called jobs bill



. Vice President Biden took a shot at one of his former colleagues today for leading what he called a one-man filibuster against unemployment benefits.

Biden was discussing the accomplishments of the White House's Middle Class Task Force, which he heads. As he was touting the task force's successes over the last year, the vice president lamented that he was disappointed by one particular senator on Capitol Hill.

"Right now a single republican is blocking the extension of unemployment insurance which means if he succeeds one million people, one million people next month will be thrown off the unemployment rolls," Biden said.



The Department of Labor calls 60,000 households in the United States each month to determine who is employed and who is unemployed. This survey is known as the household survey.

The unemployment rate that is announced is mostly based on this survey. Anyone who works at least one hour a week is considered employed by the Labor Department.

The people collecting unemployment insurance are not counted because about only 35 percent of the unemployed are eligible for unemployment insurance in the United States.

I am not a cynic but could Biden be concerned that these one million people will be added to the rolls of the unemployed if they go off of unemployment insurance

Windmills

I just saw an ad for wind turbines on TV and it was a company called Suzlon. Since I had never heard of this company I looked up the top ten companies producing wind turbines and I listed them below. Note that only one is an American company. I am wondering if the green jobs that wind energy is suppose to produce will be American jobs or jobs overseas producing wind turbines to be used here in American.





1. Vestas (Denmark) 35,000 MW[1]

2. Enercon (Germany) 19,000 MW[2]

3. Gamesa (Spain) 16,000 MW[3]

4. GE Energy (Germany / United States) 15,000 MW[4]

5. Siemens (Denmark / Germany) 8,800 MW[5]

6. Suzlon (India) 6,000MW[6]

7. Nordex (Germany) 5,400 MW[7]

8. Acciona (Spain) 4,300 MW[8]

9. REpower (Germany) 3,000 MW [9]

10. Goldwind (China) 2,889 MW[10]

CIA

In the news today it was reported that a Hamas leader was killed by Jewish agents while he was visiting in Dubai. This reminded me of the US in the early days of the cold war. We were fighting the Soviets and in the process we made friends with many bad guys. As long as a country was opposed to the Soviets we were for them and thus we sided with a lot of unsavory characters. To quote former Ambassador to the United Nations Jeane Kirkpatrick, “he may be a dictator but he is our dictator”. The CIA was going around the world attempting to overthrow governments and assassinating unwanted individuals and making use of criminal types to get information.

When these types of operations were revealed the senate formed the Church committee to investigate. The result was the trimming of the powers of the CIA. When the CIA could no longer make deals with international criminals they lost much of their information sources. Not much was said until 9-11 and then the questions came up. How come we didn’t know or at least have some warning.

Today we are not permitted to go into a foreign country and assassinate someone but we are allowed to use drones to kill enemies in foreign countries, specifically Pakistan. Apparently high tech assassinations are OK. Odd how times change.