Saturday, October 31, 2009

WSJ: Republicans Hit Democrats' Health-Care Plan

The Wall Street Journal has coverage of Republican criticism of the House healthcare plan.

The top House Republican, Rep. John Boehner of Ohio, outlined his party's alternative in the GOP's weekly radio and Internet address Saturday. Democratic proposals are gaining momentum in Congress and Republicans are scrambling for support to try to block them.


Mr. Boehner said there is a choice to be made. "We can come together to implement smart, fiscally responsible reforms to improve Americans' health care," he said, "or we can recklessly pursue this government takeover that creates far more problems than it solves.''

Mr. Boehner said a number of steps could be taken, such as letting people buy health insurance across state lines, allowing people and organizations to pool together to buy insurance for lower prices and reining in malpractice lawsuits.

The first of Mr. Boehner's points, allowing cross-state purchase of insurance, has been a Republican obsession for some time. In the U.S., health insurance must conform to the regulations imposed by each state.

First, states may mandate that certain procedures be covered in the individual insurance market, like mammographies or infertility treatments. The Kaiser Foundation tabulates the states that require coverage of infertility treatment here. It's important to note that many of these procedures are covered in group insurance. Health reform will develop a minimum set of benefits that must be covered. Without a well-designed minimum set of benefits, insurance companies would start excluding treatments in a race to the bottom. It is true that requiring coverage of rarely-used benefits will raise prices for everyone else. However, the cost may not be all that high.

Second, states may mandate rating rules. Some states require community rating (everyone pays the same price) and guaranteed issue. In the absence of a mandate to buy insurance, people are likely to wait until they get sick before buying insurance, thus driving up the cost in the individual market. This is probably the issue that the Republicans are more concerned about. However, in the absence of other reforms, allowing cross-state purchase of insurance could kick off a race to the bottom in terms of rating rules. Delaware has very low corporate taxes and less stringent regulation, and companies flock to incorporate there. Allowing the same thing to happen in health insurance would be a disaster. Massachusetts requires community rating and guaranteed issue, and it mandates that insurance plans cover at least 65% (I think) of expected expenses. If residents there could purchase policies elsewhere, the ones most likely to do so are young and healthy people who figure they need only catastrophic coverage. That would take healthy people out of their individual market, and it would drive costs up for everyone.

In addition, when an insurer sells policies in a state, it prices them according to local costs and the practice patterns of local physicians. Physicians in the Midwest and the mountain states tend to have more conservative practice patterns. California, I think, has relatively conservative practice patterns but the state is quite expensive to live in. If an insurer in Montana could sell to people in New Jersey (which is an expensive state to live in and has too many hospitals), it would have to price its policies according to local costs. In the end, they wouldn't be as cheap as Mr. Boehner thinks.

Last, state insurance regulators oversee the behavior of all insurance companies doing business in the state. If you think your health insurer has unfairly denied a treatment, you can appeal to your insurance commissioner. If you allowed cross-state purchase, it could be harder for consumers to appeal to a regulator in another state. The Republicans don't seem to have addressed that point yet.

The second and third of Mr. Boehner's points are not without validity. However, malpractice reform cannot undermine consumers' ability to seek redress from doctors; the unfortunate reality is that clinicians today have generally covered up their mistakes. Allowing association health plans is probably not worth Congress' energy. The reality in today's market is that the most sticky 'glue' in health insurance is working at a (preferably large) company. People attempt to get insurance through membership associations (e.g. University of Michigan Alumni) more as a last resort, so these groups are a much less sticky 'glue', and so there is more adverse selection than if you were purchasing insurance through an employer. Insurance purchased through membership associations is either less comprehensive, more expensive for the same coverage, or both.

The Republicans in Congress seem to think that removing regulations will somehow solve the U.S.' health care problems. They are completely and totally wrong on that score. In contrast, the recommendation of the Bipartisan Policy Center, which is a non-Congressional organization staffed by several former Senators and other policy makers, has the same insurance regulation reforms as the Democratic health reform bills. The minority of conservatives who are not willing to acknowledge reality make it much harder for everyone to cooperate. I would urge the Republicans in Congress to use the Bipartisan Policy Center's recommendations as their position on health reform; their current prescriptions completely lack credibility and will either make no difference or will actually make things worse.

Thursday, October 29, 2009

Huffington Post: Pro-Life Pretense

Christina Page, writing on Huffington Post, says that the hardline part of the pro-life movement touts its Crisis Pregnancy Centers on one hand, but criticizes funding for social services on the other hand ... and yet, the Centers refer women to those social services.

President Obama's still-to-be released common ground agenda in the abortion conflict is already having a profound and largely overlooked effect: it has exposed deep fault lines in the pro-life movement. Obama's focus on reducing the need for abortion has been embraced by some practical-minded pro-lifers who are tired of decades of intransigence, and who also appear jaded by the counterproductive "culture of life" sloganeering of President Bush. Pro-choice Bill Clinton presided over the most dramatic decline in abortion rates in the history of our country after all. Pro-lifers Reagan, Bush I and Bush II did not. For an emerging movement of reasoned, results-oriented, non-ideological pro-lifers results count. If a pro-choice president produces pro-life outcomes, they ask, are they any less worthy?

For the traditional pro-life establishment, however, they are. In fact, to them, Obama's common ground call is perceived as a threat. Since Obama takes them, their beliefs and their proposals seriously they have been forced to justify some fundamental hypocrisies, the kind that have in the past led to rhetorical victories and little progress (unless you count fundraising). Consider, for example, the clash between pro-life rhetoric and reality when it comes to crisis pregnancy centers, a much-cherished initiative of the old guard pro-lifer. A recent report, "A Passion to Serve, a Vision for Life," released by the Family Research Council is a valentine to the nation's 3,000 crisis pregnancy centers (CPCs). It commends them for communicating "to women and their families that their lives are valuable and that their needs - emotional, psychological, medical, spiritual and practical - can and will be met ."

The report details the intense efforts CPCs undertake to persuade women to not choose abortion. The main message broadcast to those coming to a center is: "support is available, you do not need to discontinue this pregnancy for financial reasons." But beside the ultrasound image women are provided and medically inaccurate pitch against abortion, the most persuasive arguments available to CPCs, as any staff or volunteer will readily admit, is that women facing crisis pregnancies can make it work by depending on a network of publicly-funded social services. For the vast majority of women convinced to become mothers, CPCs are a gateway to the welfare system.

Theoretically, a pro-life, common ground approach then would be to take seriously the benefits of CPCs as, essentially, referral agencies to services which can support women who really do want to keep a pregnancy. And also to say, "Let's make sure the right social services are in place - those that women really need - and that they are well-funded."

And here's where that old-guard rhetoric runs into the brick wall of common ground (and fact-based) reality. The Family Research Council valentine to crisis pregnancy centers may sound pretty, and even compelling, but on closer examination is it sincere? In effect, groups like the Family Research Council as well as most pro-life politicians have been two-timing their devoted crisis pregnancy center partners. While professing their love for their work, they batter the social programs on which the crisis pregnancy center movement places its trust.

The Family Research Council carefully details in its report the many federal and state-sponsored programs to which CPCs direct women including: Head Start, Medicaid, Local Health Departments, Legal Aid, State Children's Health Insurance Program (S-Chip), State Health Departments, Women Infants & Children (WIC), and the Department of Job and Family Services.

Yet when it's suggested that support for these very agencies should merit pro-life support, the Family Research Council lines up in opposition. Michael New, a senior fellow at the Family Research Council, recently launched an attack on the progressive, pro-common ground, pro-life group, Catholics in Alliance for the Common Good (CACG) for suggesting just that. CACG conducted a study linking states that provide more generous services to the poor with lower abortion rates. CACG suggested that to reduce abortion rates pro-lifers should consider the policies traditionally championed by Democrats--extending publicly-funded social services to poor pregnant women--rather than exclusively focus on restricting abortion. But suddenly, the programs that are so effective when used as resources by crisis pregnancy centers, are suspect. New writes,
"[The study's] questionable methodology and inconsistent results should give pro-lifers serious pause before they enthusiastically embrace higher welfare benefits as a strategy to reduce abortion. Furthermore, there is little peer-reviewed research which indicates that more generous welfare benefits have a significant impact. [Other studies] find that welfare benefits only have a marginal impact on abortion rates. However, as I will discuss later in the response, there exists plenty of evidence from studies in reputable peer reviewed journals that various types of pro-life laws reduce abortion rates."

New himself didn't miss the chance to praise the work of crisis pregnancy centers; he weighed in when the Family Research Council report came out, writing, "PRCs have offered real alternatives to literally millions of women facing crisis pregnancies. Countless women regret their abortions. However, the testimonials in FRC's latest report are evidence of the positive impact of the life-affirming options offered by many pregnancy-resource centers." Of course, the "life-affirming" options are now no more than a euphemism for the "welfare" which, according to New, has a "marginal impact on abortion rates.

New's attack on the Catholics in Alliance for the Common Good's policy proposal is a reflection of an all-consuming hypocrisy plaguing an ideologically entrenched pro-life establishment. Crisis Pregnancy Centers rely on a welfare system to support the women they persuade to become mothers while pro-life groups and politicians actively undermine the very programs and agencies that are the only resources available to support many women who want to have a child, as CPCs know.

In 2007, The Children's Defense Fund published its Congressional Scorecard on the best and worst legislators for children. The organization scored congressmembers votes on many of the policies that help pregnant women decide whether to parent or abort. The votes were on Head Start, increasing the minimum wage, reauthorizing and increasing funding for S-CHIP, increasing funding for children with disabilities, job training, Medicaid funding, helping youth pay for college, and tax-relief for low-income families with children. Based on their votes on these issues, the Children's Defense Fund ranked 143 congressmembers as 'the worst" for children. Of the 143 worst legislators, 100% are pro-life.

The long-established, and long-dominant pro-life complex speaks out of both sides of its mouth, praising crisis pregnancy centers and yet disparaging the social services upon which they rely. In the upcoming months, the Obama administration will be revealing its common ground agenda and one part of it promises to be supports for pregnant women. It is just the sort of agenda designed to appeal to a nascent pragmatic and moderate pro-life movement. Let's hope this rising voice of reason can lead the crisis pregnancy center movement to support an administration plan to help struggling families and indigent pregnant women. Praise for CPCs can't come packaged with attacks on the very supports they rely upon. It not only defeats common ground; it defeats reason.

Joseph Schiedler, president of the Pro-life Action League, wrote an op-ed in USA Today claiming pro-lifers who embark on the search for common ground betray the pro-life cause and, in making his case, reveals the classic characteristics of pro-life schizophrenia. He writes,

"There is no evidence that increasing social programs -- such as low-cost health care and day care, college grants and maternity homes -- will impact a woman's abortion decision. It is rare in our experience to find a woman who says the reason she is choosing abortion is that she doesn't have day care, or that she'd rather go to college...More than 3,000 pregnancy centers in the U.S. are ready to help a woman with material needs, emotional support, counseling and medical care. Anyone who wants to stop abortion should promote these centers."

Once we begin to till the soil of common ground, these contradictions and inconsistencies will become clearer. It is then that pragmatic pro-lifers may realize there will be unlikely partners along the path to genuine pro-life victories.
This post originally appeared on's OnCommonGround forum which publishes perspectives and breaking news on common ground in the abortion conflict. Join the conversation at OnCommonGround or follow us on

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Washington Post: U.S. pressures Japan on military package

As reported by the Washington Post on 10/21, some elements in Japan are exerting pressure on the US to move or close the base on Okinawa, possibly moving it to a less-populated area of the island or to the mainland. The new Prime Minister, Yukio Hatoyama, has spoken about redefining Japan's relationship with the US.

The US has pushed back quite hard, and the Post reports today that Japan seems to be caving.

For better or worse, Japan and the US need each other as a counterweight to China's increasing military power. I'm not going to comment extensively otherwise on this issue.

However, there is a bigger issue. Earlier, Amnesty International released a research report showing that multiple competing legal jurisdictions left significant loopholes where no policy agency was clearly in charge, which placed Native American women on reservations at risk of sexual assault by external parties (i.e. non-Reservation members).

There is a similar problem in Okinawa. In this case, there is a Status of Forces Agreement (SOFA) that generally shields American servicepeople from prosecution by Japanese or Okinawan authorities. There are numerous, well-documented instances of American servicemen being shielded from local prosecution by SOFAs.

This is unacceptable. A country crosses the line into empire when it disregards local laws and local needs. US servicepeople should be subject to local laws in most circumstances. In cases where they are based in a relatively democratic, allied country, there should be absolutely no question about this. There are worries that American servicepeople might be unjustly treated by local criminal justice systems - but it is not asking too much that well-disciplined, well-trained soldiers obey the law. It is not asking too much that they either not commit rape, or that they answer for their crimes if they do. Shielding American servicepeople from proper prosecution guarantees that they will commit more crimes.

David Leonhardt (NY Times): A drop in the wrong bucket

David Leonhardt, writing in the New York Times, criticizes the proposed stimulus payment to U.S. Social Security recipients on the grounds that there are many better things to do. I am forced to agree.

If you wanted to help the economy and you had $14 billion to bestow on any group of people, which group would you choose:

a) Teenagers and young adults, who have an 18 percent unemployment rate.

b) All the middle-age long-term jobless who, for various reasons, are not eligible for unemployment benefits.

c) The taxpayers of the future (by using the $14 billion to pay down the deficit).

d) The group that has survived the Great Recession probably better than any other, with stronger income growth, fewer job cuts and little loss of health insurance.

The Obama administration has chosen option d — people in their 60s and beyond.

The president has proposed sending a $250 check to every Social Security recipient, which sounds pretty good at first. The checks would be part of his admirable efforts to stimulate the economy, and older Americans are clearly a sympathetic group. Next year, they are scheduled to receive no cost-of-living increase in their Social Security benefits.

Yet that is largely because they received an artificially high 5.8 percent increase this year. For this reason and others, economists are generally recoiling at the proposal.

President Obama’s own economic advisers raised objections, as my colleague Jackie Calmes has reported. Isabel Sawhill of the Brookings Institution told me she thought the idea was crazy — and then noted she was in her 70s. Rosanne Altshuler, co-director of the Tax Policy Center in Washington, says that the checks “seem to be pure pandering to seniors.”

Indeed, the politics are attractive. People over 65 vote in large numbers. Saying no to them is never easy.

And therein lies a problem that’s much larger than one misguided $14 billion proposal.

With the economy gradually improving, members of Congress and White House officials are just starting to think more seriously about the budget deficit. Fifty-three senators voted down a narrow health care bill last week, with many citing its potential impact on the budget. On Monday, Christina Romer, the chairwoman of Mr. Obama’s Council of Economic Advisers, gave a speech in which she said the deficit was “simply not a problem that can be kicked down the road indefinitely.”

Just about everybody agrees that solving the deficit depends on reducing the benefits that current law has promised to retirees, via Medicare and Social Security. That’s not how people usually put it, of course. They tend to use the more soothing phrase “entitlement reform.” But entitlement reform is just another way of saying that we can’t pay more in benefits than we collect in taxes.

“If the long-term issue is entitlement reform,” says Joel Slemrod, a University of Michigan economist, “the fact that the political system cannot say no to $250 checks to elderly people is a bad sign.”

The first Social Security check was mailed in 1940 to Ida May Fuller, a retired legal secretary in Ludlow, Vt. It was for $22.54. Every month for the next 10 years, Ms. Fuller received a check for that same amount.

The original Social Security legislation had not included an inflation adjustment, which meant benefits did not keep up with the cost of living. A decade later, Ms. Fuller’s checks were worth about 40 percent less in real terms than when she started receiving them.

Congress finally increased benefits in 1950 and then continued to do so in fits and starts, sometimes faster than inflation, sometimes slower and usually in an election year. President Richard M. Nixon and a Democratic Congress brought some order to this process in 1972, by automatically tying benefits to the movement of an inflation index in the previous year.

The changes were part of the transformation, during the middle decades of the 20th century, in how this country treated the elderly. In the 1930s, they had little safety net and frequently struggled to meet their basic needs. Four decades later, they were the only group of Americans with guaranteed health care and a guaranteed income. All in all, it was certainly for the good.

But by the 1970s, you could start to see the early signs of excess. In their bill, Mr. Nixon and Congress included a little bonus: the increase in Social Security payments could never be less than 3 percent, no matter what inflation was. In the 1980s, Congress reduced the floor to zero — meaning that benefits would be held constant if prices fell — but the principle remained the same: heads, it’s a tie; tails, Social Security recipients win.

This year, the coin finally came up tails.

With oil prices plunging and other prices falling, last year’s high inflation (which led to the 5.8 percent increase in Social Security payments) has turned into deflation. Overall prices have dropped 2.1 percent in the last year, according to the relevant price index.

Social Security payments, however, will remain as they were, which means that recipients are already set to receive an effective raise, even without Mr. Obama’s $250 checks. No matter what happens with that proposal, 2010 will be the first year since at least the Nixon era that the buying power of an individual worker’s Social Security goes up.

Compare that to what’s happening with minimum-wage workers in Colorado. Their wage is also tied to inflation, but it has no floor. So it will fall slightly next year, to keep pace with prices.

Now, I understand that there are arguments on the other side of the issue. Lawrence Summers, Mr. Obama’s top economics aide, pointed out that the stimulus bill included one-time $250 payments for Social Security recipients, which were sent out this year, but tax cuts for workers both this year and next year. “We’re correcting an anomaly,” he told me.

Others will argue that the elderly simply need help. Some have been the victim of age discrimination. Too many still live in poverty. All of them are likely to see their Medicare premiums rise in 2010. This recession has spared no group.

But older Americans really have survived the recession better than most.

Many of them started buying assets years if not decades ago, meaning they were not the main victims of the stock and housing bubbles. They had a cushion. In addition, relatively few of them work in manufacturing or construction, the hardest-hit industries.

Just consider: The real median income of over-65 households rose 3 percent from 2000 to 2008. For households headed by somebody age 25 to 44, it fell about 7 percent.

Economic policy, like most everything else, is about making choices. Mr. Obama is choosing the elderly, rich and poor, to be more worthy of $14 billion in government checks than struggling workers or schoolchildren. Republicans have pandered in their own ways, choosing to oppose just about any cut in Medicare and, in effect, to stick your grandchildren with an enormous tax bill.

In a way, I understand where the politicians are coming from. We voters may say that we are in favor of cutting the deficit, but usually mean it in only the theoretical sense. Who wants their own benefits cut? For that matter, who is even willing to have their Social Security checks hold steady?


Thursday, October 22, 2009

NYT Economix blog: In Health Care Premiums, Who Gets a Subsidy?

The Economix blog on the New York Times site has a good article about who will subsidize whom in health insurance. One of the main purposes of health insurance is to pool risk and have the healthy cross-subsidize the sick. However, insurance companies have also charged more (in the individual market) to smokers, women, older folks, and people with families.

It true that all these groups have higher utilization than their counterparts. On the other hand, asking others to subsidize them excessively may be perceived as unfair. In the case of the old vs. the young, younger folks almost always earn less than older folks, so they are unable to subsidize them. For men vs. women, men still have higher lifetime earnings, so asking them to subsidize women is fair.

The only categories upon which health insurance companies will be able to price-discriminate are tobacco use, age and family composition. The requirements:

1) An insurance company would be allowed to charge tobacco users a health care premium that is one and a half times as high as the premium charged people who don’t use tobacco.
2) A plan’s oldest subscriber could be charged five times as much as a plan’s youngest subscriber.
3) A single adult with a child could be charged 1.8 times what a single adult alone could be charged; a “family” — which, from what I can tell from speaking with actuaries and insurance company representatives, generally refers to two adults plus at least one child — can be charged three times the premium a single adult is charged.
To help you visualize these price differences, here’s a chart showing the ratios:

Rampell asked if these ratios were actuarially fair - for example, are smokers' health care costs really 1.5x that of non-smokers? The answer is that's about right:

I was curious about whether these ratios were actuarially fair — that is, whether these ratios truly reflected the different annual costs to an insurance company of covering a smoker versus a nonsmoker, for example, or an older person versus a younger person. Representatives of both America’s Health Insurance Plans, an industry group, and the American Academy of Actuaries, a public policy organization, said that these ratios were pretty close to being actuarially fair.

Still, the 3:1 ratio for families versus a single person seems to be a big subsidy for families with lots of children. That is, a family with two parents and six children can apparently be charged a premium that is no more than three times the premium charged a single healthy person — even though the total cost of that family’s care is almost certainly more than three times the cost of the single person’s care. (Is this perhaps a pronatalist policy?)

The age ratios also may be a slight subsidy for older people, though Robert Zirkelbach, a spokesman at America’s Health Insurance Plans, said the permissible age ratio is not too far from reflecting the relative costs of covering the old and the young. He noted that previous health reform proposals had set a more elderly-subsidizing age ratio of 2:1 — meaning that young, healthy people would be paying much higher rates proportionate to their actual health costs in order to prevent older, less healthy people from paying rates that reflect the (actual) high cost of providing the latter medical care.

“Everybody would love for older people to not have to pay exorbitant premiums,” said Cori Uccello, a senior health fellow at the American Academy of Actuaries. “But keep in mind that the more you lower them beyond average cost, someone else will have to pick up the tab.”

If younger people have to pay rates that they think are unfairly high, she cautions, they may decide that buying health insurance isn’t worth it, even if the law requires that they purchase health insurance coverage. (The Baucus plan has such a mandate.) Perhaps young people will decide that it’s cheaper to pay a fine for forgoing health insurance than to pay for an expensive health insurance plan.

“The ratios are important, but the insurance mandate also has to be effective and enforceable,” Ms. Uccello said. “Otherwise the low-risk people who don’t think they’re getting a good deal will just say forget it.”

There are also lots of other risk factors that the premium-price ratio guidelines don’t allow insurance companies to consider.

For example, the Baucus proposal does not allow premiums in the individual market to be set based on gender. Gender, however, can be a pretty good predictor of risk.

Generally speaking, young women tend to incur higher medical costs than young men, even excluding the costs of maternity care. At some point around age 50, though, men start to cost more than women. So having unisex premium rates means that at some point in their lives members of each sex would be subsidized by, or subsidizing, the other sex.

In other words, if a demographic category is charged less than is actuarially fair, some other demographic category is subsidizing their costs. Under the Finance bill, there is little to no cross-subsidization between the demographic factors that are allowed (save for gender and family size). Many of the subsidies that are present can be justified. I've heard complaints especially about the age rating, but again, younger people generally have lower earning power and are less able to subsidize older people. Remember, many people on the exchange will get subsidies.

For family size, we are all subsidizing very large families. I imagine that insurers don't charge per child due to administrative reasons - large families are rare, and it would be a considerable paperwork burden to charge everybody per child.

Tuesday, October 20, 2009

Aaron Taylor on Sojourners: Caught Between Two Worlds: Progressive and Evangelical

Aaron Taylor, a Pentacostal pastor and member of a Christian Peacemaker Team, blogs about his conflicting experience on Sojourners. I do not agree with his worldview and will write a response, but he has a very genuine commitment to peace and writes very well.

I’m trembling as I write this one. I’m already isolated within my own faith community (Pentecostalism) for my views on war and peace; and I know that what I’m about to write here may put me at odds with a lot of people in the progressive evangelical community — a community I’m just getting used to. In addition, there’s always the fear of being misunderstood, so regardless of whether you agree or not with me, know that at least it’s my aim to speak the truth in love.

I love Christian Peacemaker Teams. I especially love their motto: “What would happen if Christians devoted the same discipline and self-sacrifice to non-violent peacemaking that armies devote to war?” I wish all Christians on the planet would ask themselves that question. I have nothing but admiration and respect for full and part-time CPT workers that live out that motto every day. When I went on a delegation with CPT in October 2007 to the West Bank, it radically changed my life.

So why am I conflicted about CPT? It’s not that I don’t believe in the organization. I do. It’s not even because I necessarily disagree with their anti-proselytizing policy. I understand that every organization has its own purpose and mandate. But as a long-time evangelical missionary and a recent convert to non-violence, I find myself caught between two worlds. On the one hand, I move freely in circles that “pray through the window” and map “unreached people groups.” On the other hand, my devotion to peace and non-violence cause me to move in peace circles — many of which are comprised of theologically liberal Christians.

Never was this more obvious than when I was on the CPT delegation. It took all of about two hours for everyone in the group to realize that I was the “evangelical” in the group. When I was asked to describe myself, I shared with the group honestly about what I had been doing over the past several years: traveling the world and sharing the gospel. Throughout the week, I had many discussions with individuals in the group about why I believe that Jesus is God and why I don’t believe that all religions are equal paths to the same truth. For the most part, the group was respectful, but there was the occasional anti-missionary remark that reminded me of my minority status within the group.

Maybe peacenik evangelical missionaries like myself need an alternative to CPT. Then again, maybe not. I think it’s at least an option that should be looked into, and I’m willing to dialogue with anybody even remotely interested in pursuing the matter further.

My concern isn’t just with CPT, but with the progressive evangelical movement at large. I’m conflicted because I’m concerned about the implications of progressive evangelicals continuing to endorse groups like CPT as “a new face of global missions” in their books and articles. If young people join these kinds of efforts to experience “a new face of global missions,” how many of these young people will eventually jettison their biblical orthodoxy? Even worse, I wonder how many have already jettisoned their biblical orthodoxy?

I just wonder if in our sincere efforts to promote peace and tolerance between people of different faiths, we’re becoming more “progressive” than “evangelical”? I wonder if we’ve gone too far in laboring to share physical bread with the masses that we’ve neglected to share the “Living Bread” with the masses.

I pray that we in the progressive evangelical community will never forget that despite all of our efforts to save the world, the “form of this world is passing away.” May we labor “not for the food which perishes, but for the food which endures to everlasting life” (John 6:27).

Aaron D. Taylor is the author of Alone with A Jihadist: A Biblical Response To Holy War. To learn more about Aaron’s missionary work and his travels around the world, go to Aaron can be contacted at

Update on the CLASS Act: changes have made this long-term care insurance program viable

Earlier, I criticized the CLASS Act, a long-term care insurance proposal that the late Sen. Kennedy sought to add to health reform. I felt that the program would not be financially viable.

However, I was at an event hosted by the Kaiser Family Foundation earlier today, where several panelists discussed the CLASS Act. It seems that changes have been made to the program structure. One of the key ones is that there is now a work requirement in the initial 5 year vesting period. Enrollees must pay premiums for 5 years in order to be eligible for benefits; now, they must also be working 3 out of the 5 years. This will inevitably weed out some elderly folks who would otherwise have paid premiums and then have become disabled and been eligible for the benefits almost immediately after the vesting period was over.

That's tough for those folks. However, any voluntary insurance program must deal with this problem, known as adverse selection, in some way. Basically, adverse selection happens when more sick people enroll in one insurance plan than in others, which drives up premiums for those in the plan. Social insurance programs usually deal with adverse selection by mandating that everyone enroll. Private insurance programs usually underwrite, or charge people different premiums based on their health status or other risk factors.

The changes do mean that the CLASS Act will probably be viable as a voluntary program. It was especially striking that Paul van de Water, a senior fellow at the Center on Budget and Policy Priorities, said that whatever deficits the Act produced past the 10 year budget period would be manageable. If the Act would have killed the Federal budget, I am certain Dr. van de Water would have said so; he was a very senior official at the Congressional Budget Office.

It does remain to be seen how many people enroll. The American Academy of Actuaries and the Congressional Budget Office both project around 5% enrollment, which is quite low and which is about the number of people who are enrolling in private long term care insurance programs today. CBO is the official scorekeeper for the U.S. Congress and is well-regarded and non-partisan. AAA is also non-partisan, and has considerable actuarial expertise. Of course, the U.S. has never done anything like this, and so their 5% figure might turn out to be pessimistic; if more people, especially more young people, enroll in the CLASS Act, then the premiums will be lower than what we might otherwise expect. Conversely, if the initial enrollment is older, the premiums will be higher.

If the CLASS Act gets wide enrollment, it could be transformative for long-term care. Far fewer people who could otherwise be supported in the community would be forced into Medicaid (the program for the poor) and nursing homes. Most long-term care is given informally by family members, mainly women; these caregivers would now be able to replace some lost income and hire respite care as needed (respite care means hiring a paid caregiver so you can get a break). The CLASS Act wouldn't solve all the U.S.' long-term care problems, but it would be a big step forward. As long as the financing is sound, I hope it passes.

Saturday, October 17, 2009

WSJ: Obama Wins a Battle as a Teachers' Union Shows Flexibility

The Republicans have constantly pushed for accountability in education. They want to be able to sanction, and if necessary fire, underperforming teachers, a position strongly resisted by teachers' unions across the country. To be frank, my impression as an outside observer is that the Republicans are uninterested into allocating the resources to school districts that need them, which probably fuels the impression among union folks that the Republicans just want to break the unions.

I do agree that teachers who don't have the necessary skills or abilities should be replaced. However, there's a measurement problem. It's hard to sort out the teachers who underperform because they don't have the ability from the teachers whose students underperform because they were poorly educated by the last teachers, because they have family problems that prevent them from getting a good education, or because they are in a poor school district without the resources to teach them properly. In other words, it's hard to separate the problems of teacher qualification from structural problems. The No Child Left Behind Act mandated national performance measurements, but penalized schools which underperformed on those measurements without properly accounting for structural impediments to kids' learning.

There is a similar measurement problem in healthcare - it's been hard to compare quality among physicians based on patient outcomes because some doctors (especially those in academic medical centers) simply get patients whose diseases are worse than others. However, in healthcare, there are clear and consistent criteria for defining if a patient has a myocardial infarction (i.e. a heart attack), for example. Similar criteria would be far harder to define in education. For example, how do you measure whether a child was properly prepared by her elementary school? As I recall, performance on the SAT, a test used for admission into undergraduate, doesn't predict school performance very well - but it does predict performance on the GRE, which is the standardized test for admissions to most graduate schools, very well.

It is clear that, aside from devoting more financial resources to poorer schools, teachers need to work with school officials to aid, sanction or remove underperformers. They need to be willing to accept a certain amount of flexibility in union contracts. The Wall Street Journal has typically been critical of unions, but they have a pretty good article on this subject. An excerpt:

A showdown between the White House and the powerful teachers' unions looks, for the moment, a little less likely.

This week in New Haven, Conn., the local teachers union agreed, in a 21-1 vote, to changes widely resisted by unions elsewhere, including tough performance evaluations and fewer job protections for bad teachers.

Education Secretary Arne Duncan, as well as the unions, said the New Haven contract could be repeated in other school districts.

"I rarely say that something is a model or a template for something else, but this is both," said Randi Weingarten, president of the American Federation of Teachers, who helped broker the New Haven deal.

"This shows a willingness to go into areas that used to be seen as untouchable," Mr. Duncan said.

His cause for optimism is this: If teachers' unions start showing flexibility in other cities, the administration's high-stakes push to boost graduation rates and improve test scores at public schools could get a lot easier. That might even spare the administration an unwanted fight with a labor force that gave Mr. Obama a big lift in his election.

Under pressure from the Education Department, the country's two powerful teachers unions, Ms. Weingarten's AFT and the larger National Education Association, are already budging in ways that were previously unthinkable. The two unions have a combined membership of 3.6 million employees.

The AFT recently issued a batch of innovation grants to districts that are tying teacher pay to performance -- a practice usually frowned upon by unions. The NEA is taking similar steps to encourage tougher evaluations and to loosen seniority systems, moves that Mr. Duncan called "monumental breakthroughs."

It is also noteworthy that the AFT seems almost as pleased with New Haven as Mr. Duncan.

Public schools in many bigger cities, including New York, Los Angeles and Washington, D.C., are seeing the usual tension between unions and school administrators.

In Washington, Chancellor Michelle Rhee has collided with both the national and local unions. The city moved ahead recently with the firing of 388 school employees, nearly 6% of the work force.

In New Haven, by contrast, all sides agreed on the new contract after months of closed-door negotiations. The deal allows the city to close its worst schools and bring in new management, though any new teachers would have to join the union. In exchange, the union got an average 3% raise each year for four years.


With the final rules scheduled to be out in mid-November, the unions are warning about limits on their flexibility. The groups are most troubled by Mr. Duncan's quest to link teacher pay to student performance, especially if it is measured only through standardized tests.

"To evaluate a teacher or a school on a single test makes no sense," said Mr. Von Roekel, who used to teach high school math in Arizona.

The unions also are wary of some of Mr. Duncan's other prescriptions, including his proposals to shut down and reorganize many of the country's most troubled schools....

One wonders if educators should have a conversation with healthcare quality experts on pay for performance measures.

Cut another $250 check to U.S. seniors?

Social Security, the U.S. social insurance/retirement program, is indexed to the Consumer Price Index, which measures the inflation rate. As with any sort of measure, the CPI is not perfect. It is a measure of inflation based on the average consumption of a very diverse nation. The CPI increased nearly 6% last year, mainly driven by a spike in energy prices. There's some evidence that much of that spike was driven by speculation, and energy prices and the CPI have since fallen. The law requires that Social Security benefits not be reduced no matter what happens to the CPI, and the CPI isn't expected to exceed 2008 levels until 2010 or 2011. This means that Social Security payments are staying flat this year, and probably next. However, seniors are spending more on healthcare, which the CPI doesn't capture adequately (the CPI measures a basket of goods used by the 'average' American consumer, but healthcare prices rise faster than the CPI, and the elderly use more healthcare services).

If I have my facts straight, seniors, most of whom aren't currently paying taxes, got a one time $250 rebate last year under the stimulus bill. Taxpayers got a tax credit that the Administration would like to make permanent, and which is going to continue for the next year at least. However, seniors aren't getting any further aid. The Administration has called for a one time $250 payment this year.

There is some case for giving seniors an additional rebate this year based on fairness. However, many sources I respect feel that the overall case is weak. Here are some excerpts from a Washington Post article:


Institute Fellow at the Urban Institute; director of the Congressional Budget Office from 1983 to 1987 [Editor: Urban is considered to lean slightly left.]

The Great Panderer strikes again. It is outrageous to give seniors "emergency" aid when so many in our society suffered far more during the recession than the lack of a cost-of-living adjustment. Even if the cost of the proposed handout is paid for with tax increases or cuts in other spending programs, it would be much better to preserve such measures for deficit reduction.

Irresponsible proposals of this type will probably hasten the day when foreigners stop lending us money. Then, seniors may suffer an economic collapse along with everyone else. At that point, there won't be any money available to help them.

Some day we may get serious about the deficit, but there is no sign of it yet. The Senate Finance Committee's health reform is partially paid for by a cut in physician reimbursements that will never occur. Various components of the stimulus program will probably be extended. And if the administration has a long-run plan, it is keeping it secret.

On the other hand, perhaps I should reconsider. My wife and I appreciated the $500 we got earlier this year. The boat needed fixing, and that was a real emergency. This time, a good dinner at Citronelle would be nice.


Senate majority leader (D-Nev.)

Providing an additional economic recovery payment to seniors, veterans and disabled Americans won't only provide helpful relief, it also makes sense as a matter of fairness and economics.

Older Americans on fixed incomes are being squeezed by rising health costs, even while retirement savings and home values have plummeted. Next year, without a Social Security cost-of-living adjustment and with few jobs available for those able to and needing to work, many will face real economic pressures.

To respond to such pressures and help strengthen the economy, Congress provided two years of tax relief to working Americans through the Recovery Act's "Make Work Pay" credit. But we provided only a single, smaller companion benefit for those who already have spent a lifetime contributing to their community. Extending that benefit another year provides some measure of equity, along with a very modest boost to the economy.

At a time when so many Americans are struggling, I hope we can put aside partisan bickering to help struggling seniors, veterans and disabled Americans. It's the right thing to do, and I will be doing all I can to make it happen.


Chief economist at the Concord Coalition and blogger at

Congress and the administration are calling for a $250 payment to seniors to make up for the lack of a cost-of-living adjustment (COLA) to Social Security benefits in the coming year. But the purpose of a COLA is to help incomes keep pace with inflation, which means when there's no inflation, there's no adjustment in benefits needed. President Obama claims that this "emergency" aid is justified because seniors' wealth has declined in this recession. But, of course, all kinds of Americans have suffered.

This is not about making seniors "whole." Because seniors are guaranteed to receive Social Security benefits regardless of the strength or weakness of the economy, they more than others have had a significant part of their income protected in this recession, and they received special aid in the last stimulus package, too. This is about taking from one generation and giving to another. By choosing to finance the provision by borrowing, our politicians hope the beneficiaries (seniors) will notice -- while those most heavily penalized (our kids and grandkids) are thankfully not old enough to vote. This seems to be a purely political strategy to pander to seniors (once again) over other groups.



Chief economist of Moody's [Editor: Zandi consulted for the McCain campaign and likely leans conservative. However, he's a well-respected economist who doesn't seem overly partisan.]

Cutting another check to senior citizens isn't at the top of my economic policy priority list, but it is on it. The economy needs more temporary help to ensure that it does not unravel back into recession. Giving hard-pressed seniors a bit more cash will provide a measurable boost to their spending, just about when they realize that there won't be a cost-of-living increase to their Social Security payment.

If the checks are mailed, say, next January, the annualized increase in real GDP during the quarter would be about 0.2 percentage points. This is small but meaningful. Most importantly, it signals policymakers' willingness to remain aggressive in responding to the economy's ongoing ills.

The stimulus has been effective in bringing an end to the recession, but important parts of it will soon expire before a self-sustaining expansion takes hold. It also makes sense to extend benefits to unemployed workers who lose their jobs next year when the unemployment rate will be in double digits; so does extending the first-time homebuyer tax credit and certain tax cuts for businesses. Taxpayers have reason to worry about the costs of all this, but the price tag for not doing these things would be greater.


Director of the Congressional Budget Office from 2003 to 2005; senior economic adviser to Sen. John McCain's presidential campaign

No. Social Security benefits are indexed to ensure that benefits keep up with consumer inflation. Inflation has been flat, so there is no need to raise benefits. That should be the end of the story. Instead, two rationales have been offered for raiding the barren Treasury to send $250 checks to seniors. The first is that the cost of living for seniors rose anyway, despite the flat inflation. This argument neatly sidesteps two key facts: (1) The consumer price index does not measure any particular person's cost of living perfectly -- it is always a rough measure; and (2) there are probably many years -- such as last year, when seniors got nearly a 6 percent increase -- when the usual adjustment is probably too high. Why only adjust up?

The second argument is that the economy needs more stimulus. It does not. And if it did, this is the worst kind -- one-time, lump-sum checks. The most recent demonstration of this was the ineffectual Bush administration checks in 2008.

A more likely rationale is purely political. Seniors are nervous that health-care "reform" will eat at the foundations of their Medicare benefits, so it is a good time to assuage their fears by greasing their palms. Their fears are unwarranted -- no future Congress will have the gumption to follow the Senate plans for Medicare. But the logic suggests that we all deserve checks because reckless health-care reform will create another underfunded entitlement that will erode the foundations of all our livelihoods.

Diana Zuckerman

President of the National Research Center for Women and Families

The proposal to give an extra $250 to every Social Security recipient is a great example of how politics undermines common sense. Social Security benefits go up each year to keep up with inflation, but since the cost of living went down this year, there is no rational reason to give $250 to each beneficiary, regardless of their income.

This $250 gift is not free. It adds to our deficit and undermines the health of our Social Security system, which already faces a crisis when large numbers of baby boomers are retired. Future Social Security benefits will need to be decreased to make up for the $13 billion spent on this program.

Even if the temptation to assist Social Security recipients is irresistible, this is not the way to do it. Instead, why not provide a $250 bonus to those with incomes below a certain level, or not provide it to people with unearned income above a certain level, rather than to everyone, including aging millionaires and billionaires? One reason why Americans love Social Security is that it is not "welfare" -- it is earned, based on taxes previously paid. This $250 is not. If this is not an earned benefit but rather a program to help the poor, we should give it to those who most need it, regardless of age. If it is a poverty program for the elderly, why not give the money to elderly people who most need it and will soon spend it?

In addition, the Center on Budget and Policy Priorities, which leans left, has a more detailed article by Kathy Ruffing arguing that there should be no cost of living adjustment. An excerpt:

... Before 1975, Congress periodically granted across-the-board increases in Social Security benefits — acting ten times between 1950 and 1974 (and six times between 1965 and 1974). The 1969-71 Social Security Advisory Council, a congressionally mandated panel convened every four years to review the program, urged legislators to replace this ad hoc system with automatic increases that would assure beneficiaries of stable purchasing power. Groups representing senior citizens supported the proposal, as did a number of fiscal conservatives who believed that providing an automatic COLA would be more fiscally responsible than basing Social Security benefit levels in part on the outcomes of periodic congressional bidding wars.

In 1972, Congress voted overwhelmingly to adopt automatic COLAs beginning in 1975, with the increases based on the Consumer Price Index for Urban Wage and Clerical Workers (the CPI-W). They also provided for automatic adjustments in the wage and salary level up to which Social Security payroll taxes are levied — the so-called “taxable maximum” — in step with average wage growth. With some refinements (notably in 1977 and 1983), this structure remains intact today.


The Bureau of Labor Statistics (BLS) calculates that overall consumer prices have fallen significantly since then (see Figure 1). Energy prices have declined by nearly one-quarter, and prices for other goods and services have increased only modestly. Since the purpose of COLAs is to preserve beneficiaries’ purchasing power, the decline in overall prices means that beneficiaries do not need a COLA in January 2010.

In fact, if Social Security and other indexed benefits that use the CPI-W — Supplemental Security Income (SSI), railroad retirement, veterans’ compensation and pensions, and federal civil service and military retirement — were strictly pegged to the inflation rate, their recipients would receive a negative COLA (i.e., a reduction in benefits) of 2.1 percent in January 2010. Fortunately for those recipients, the programs’ statutes bar a downward adjustment of benefits.

The Congressional Budget Office and the Social Security trustees do not expect the CPI-W to return to its summer 2008 peak until mid-2011. Under that assumption, Social Security beneficiaries and recipients of other indexed benefits will get their next COLA in January 2012. In the meantime, their benefits are safe from reduction.


These proposals are costly. A 3 percent increase would cost $15 billion to $20 billion annually in Social Security benefits in 2010 and beyond. (The two bills that propose an across-the-board increase contain no mechanism for cancelling that increase, or subtracting it from future COLAs, so the higher benefits would last for the rest of their recipients’ lifetimes.) A lump-sum payment of $150 for Social Security beneficiaries would cost about $8 billion, while the proposed one-time payment of $250 would cost about $14 billion (including SSI and other programs). ...

Friday, October 16, 2009

Kaiser Health News audits AHIP's (health insurance lobby) advertisement claims

Kaiser Health News, the media arm of the nonprofit Kaiser Family Foundation, audits the latest advertising bid of America's Health Insurance Plans. AHIP's predecessor organizations torpedoed the Clinton health reform bill. AHIP had been supportive of many aspects of the present reform bills until the Finance bill came out with a weakened individual mandate. As I've explained earlier, the weakened mandate does hurt them, but I think they can and should live with it.

AHIP's advertising is also attacking cuts to Medicare Advantage, an extension of the Medicare program that pays private insurers (at first, it was only HMOs) to deliver services. MA, as it's called, is about 14% more expensive than if the beneficiaries were in traditional Medicare. MA was set up with excessive subsidies to private plans. It basically represents an unplanned expansion of the statutory Medicare benefits. If the program had seniors pay additional premiums for the additional services, that would be one thing, but the government is paying. MA benefits should be scaled back.

Here's KHN's analysis:

AD TITLE: "Medicare Advantage Facing $100 Billion in Cuts"

SPONSOR: America's Health Insurance Plans (AHIP)

SUMMARY: Upset that the Senate Finance Committee health legislation would allow millions of people to continue going without health coverage, the insurance industry launched an ad campaign against the bill. Its aim: To convince seniors they'd be losers under the legislation – in large part because of a proposal to cut payments to Medicare Advantage, the private plan part of Medicare.

Seniors, the ad says, could be forced to give up "more than their fair share" to help pay for reform. But that argument, many health experts say, turns on its head the real Medicare inequity—that the government has for years so overpaid the private plans that many enrollees receive additional benefits, such as eyeglasses and dental care, that seniors in traditional Medicare don't get.

BACKGROUND: Until this week, AHIP, the trade group for insurers, has been generally positive about efforts by President Barack Obama and congressional Democrats to overhaul the nation's health care system. That's due in large part to assurances from lawmakers that almost everyone would be required to get insurance.

Such a requirement would bring insurers millions of healthy new customers who would pay premiums but need scant medical care. Adding them to the pool, the industry figures, would offset the sicker people they'd be required to cover under the legislation.

But the committee, before approving the bill, weakened the individual-insurance requirement, making it easier for people to go without coverage. If too many healthy people skip coverage, insurers fear, the financial stability of their insurance pools — not to mention the size of their profits — would be jeopardized.

Earlier this week, insurance-industry groups released two studies arguing that premiums would rise sharply under the legislation. But the television ad takes an entirely different tack. It warns seniors in Medicare Advantage plans that their benefits could be reduced. The ads are airing in Missouri, Colorado, Kentucky, Louisiana, New Mexico and Pennsylvania.

AUDIO AND VISUALS (Missouri version): A female narrator speaks over a series of brief scenes, one in which an elderly man and a young child together page through a photo album, and another with a concerned-looking man going through paperwork at his desk at home. In two other scenes, an elderly woman sitting at an inside bench and then a man reading a newspaper on a park bench both stare grimly into the camera, giving the impression of disapproval.

"Most people agree that we need to reform health care," the narrator says as a piano plays in a minor key. "But is it right to ask ten million seniors on Medicare Advantage for more than their fair share? Congress is proposing over $100 billion in cuts to Medicare Advantage. The nonpartisan Congressional Budget Office says many seniors will see cuts in benefits." The screen shows the words "50% reduction in extra benefits." The narrator concludes: "And Missouri is hit hard. Call your senators. Tell them we need health care reform that protects seniors."

The screen shows the words "Protect Medicare Advantage" and a phone number for an AHIP office, where listeners are coached on what to say before being connected to their senators' offices.

POLITICS: The insurers' principal concern – that people will be able to wriggle out of the requirement to get insurance – isn't likely to generate a lot of sympathy from the public. It's a different story with Medicare Advantage, which is popular with many seniors thanks to its additional benefits. The ad also is a reminder to Democratic senators facing competitive races next year that seniors are a potent voting bloc.

ACCURACY: AHIP leaves out some important context. The $100 billion in proposed cuts would occur over 10 years, not immediately, and would amount to a 7 percent reduction compared to current law.

AHIP, in arguing that Medicare Advantage is being unfairly targeted, says that about one-quarter of the $404 billion in spending cuts in the Senate Finance bill would come from the Medicare Advantage programs.

But enrollees in the plans would hardly get the harsh treatment the ad suggests. At worst, they would end up getting the same benefits as people in the traditional Medicare program.

The government currently spends an average of about 14 percent more on members of Medicare Advantage plans than on beneficiaries in the traditional fee-for-service program. Those extra payments allow some insurers to offer perks such as low or zero premiums, eyeglasses, free gym memberships, dental care and blood pressure machines. "What's unfair is they've been getting more all along," says Marsha Gold, senior fellow at Mathematica Policy Research, a nonpartisan firm.

The CBO has projected that, if the cuts were enacted, people in Medicare Advantage would receive extra benefits averaging about $42 a month in 2019, about half what they'd get without the cuts. About 2.7 million people would leave the plans by 2019 and return to traditional Medicare.

A number of nonpartisan Medicare experts favor trimming payments to Medicare Advantage plans. The Medicare Payment Advisory Commission, which advises Congress, says it "is unfair to taxpayers and beneficiaries not enrolled in MA plans who subsidize those payments" and has recommended reducing the payments to encourage the plans to be more efficient—and also to help improve Medicare's long-range financial picture.

When the narrator warns about "cuts in benefits," many beneficiaries might think their entire benefits package is in danger of being halved, when actually it's only the extra benefits – those that go beyond what's offered in the traditional program – that are at risk. The ad flashes the phrase "extra benefits" on the screen, but it's a distinction that the casual viewer could easily miss.

Tuesday, October 13, 2009

Washington Post: Unbanked but no longer ignored

The Washington Post reports that Congress may be taking some action on the unbanked and alternative financial services:

Three bills in the House and one in the Senate that were submitted this spring seek to curb one of the industry's most controversial practices: charging triple-digit interest rates for short-term loans to risky customers. The bills would impose caps as low as $15 for every $100 borrowed and, in some cases, require greater transparency of the lending terms.

But industry representatives say they provide necessary services for households that have become alienated from traditional financial institutions. Many of their customers have poor credit and may not qualify for basic bank accounts. The payday-lending industry has opposed capping interest rates, and its trade group, the Community Financial Services Association, is raising $1 million from its members to lobby against the bills. CFSA spokesman Steven Schlein said the group has reserved judgment on the proposed Consumer Financial Protection Agency.

"It's all in the details," he said. "It would be a big change for us."

The Financial Service Centers of America, which represents check cashers, said that it supports increasing transparency to customers but that additional federal regulation "is unnecessary and duplicative and will only increase the cost of financial services to consumers without any corresponding benefit." The trade group for payday lenders said it began requiring members to display their fees on posters in their stores last year.

The industry, eager to protect its profits, is pushing innovation. They should be reminded that innovation also played a big role in the subprime crisis. However, the fact is that if it isn't viable for whatever reason to offer services to the poor, then the industry won't be able to offer them no matter what legislation says, unless there are subsidies.

Industry advocates argue that innovation -- not legislation -- is the key to reform. And the private sector has been quick to step in with other solutions.

Some credit unions offer short-term loans as an alternative to payday lenders. North Side Community Federal Credit Union in Chicago, manager Ed Jacob said, introduced a six-month, $500 loan with 16.5 percent interest several years ago. The credit union has since made 5,000 such loans, and it has become one of the most popular products.

Meanwhile, start-ups such as Progreso Financiero in California are targeting new niches. James Gutierrez founded Progreso in 2005 to make short-term unsecured loans of $250 to $2,500 to Hispanic families lacking credit scores and banking records. The company charges 36 percent interest, significantly less than other payday lenders charge but still more than double the average consumer credit card interest rate.

Financiero has made about 25,000 loans to its customers in California but needs to make 100,000 before it can turn a profit because the loan amounts are so small and the cost of doing business is high, Gutierrez said. Jacob said the credit union doesn't make any profit from its payday-loan alternatives. Instead, it hopes to boost members into good financial standing so they can then apply for profitable products such as auto loans.

Some industry veterans are also moving into the sector. Just this year, Wal-Mart lowered the price of its prepaid debit card to $3 and its fee to cash checks to a maximum of $3. It also allows shoppers to pay many of their bills in stores. The giant retailer estimates that about 20 percent of its customers are unbanked.

"Our customers are living paycheck to paycheck and watching every penny," said Jane Thompson, director of Wal-Mart's financial services.

North Side Community Credit Union and Financiero are the types of innovation we need to see. As I stated in an earlier post, the poor deserve to have access to free, basic financial products - a checking account, a debit card, and perhaps a credit card with a low limit. There must be no weasely fees, and the checking account must be free. The only way for banks or credit unions to offer those services to the poor is to cross-subsidize using more profitable auto or housing loans.

There is an additional problem with financial literacy.

But perhaps the biggest hurdle the industry faces is improving customers' financial literacy. Many are afraid of leaving their money in banks, do not have the documentation to open a bank account or have had accounts closed. They also may not understand how loans are structured.

D.C. resident Gregory Warf, 20, said he doesn't want a bank account. He turns his savings over to people he trusts, like his brother, or hides it. If he needs to cash a check, he goes to the nearest liquor store, which charges him a fee. And if he needs money -- say, $10 to put on his SmarTrip card -- he asks a friend.

"I'd rather have my money in my possession," Warf said. "I don't really trust anybody else."

I'm fairly sure, though, that the first step is getting credit unions and possibly banks to offer acceptable products to the poor - acceptable products that don't have weasely fees and terms.

Monday, October 12, 2009

Addendum to my last post on the health insurance industry's complaints

Ezra Klein, blogging for the Washington Post has a link to the actual PwC study and offers some more analysis.

One of the other cost factors I neglected to mention is actuarial value. Briefly speaking, actuaries can make some assumptions about which health services a standard population would use, calculate how much those services would cost and run those costs through an insurance plan. That would produce an average percentage of how much of the costs would be covered by the insurance.

For example, Medicaid will cover all medically necessary care with zero cost sharing. Its actuarial value is 100%. A good employer sponsored plan will probably cover 80%-95% (going off my memory here) of incurred expenses. In other words, of your total medical bill, the insurance will pick up 80-95% of the tab. Of course, that will vary from person to person depending on what illness you incur and the terms of the contract. Almost all plans will sell you generic drugs cheaper than branded drugs, but if you have a rare disease, you will pay more. Some plans limit mental health care, so if you need that, you'll pay more. Some plans will have limited reimbursement for hospitalizations (e.g. a separate deductible you must meet, perhaps a maximum number of hospitalizations). Some plans have a lifetime limit on benefits, and if you have a very serious illness, you can quite easily meet a $2 million lifetime benefit, even though it sounds like a lot.

Insurance bought on the individual market has a far lower actuarial value. For the insurance plan I have, I would be surprised if the actuarial value were over 35%. Massachusetts mandates that bronze level plans (the cheapest you can buy if you're not a young adult) have an actuarial value of 56%, according to the PwC report. Actually, I thought it was more like 65%, and Massachusetts has young adult plans which I thought had an actuarial value of more like 50% or so, but PwC would probably know better.

Higher actuarial values cost more but protect you more. So, you will pay more, but you will get a lot more - and you won't have the illusion that your plan is protecting you when it doesn't. A lot of the exclusions I mentioned above will be curtailed

The Finance bill specifies a minimum actuarial value of 65%. That is actually quite low. It will have to do for now, but in the long run we want plans with an actuarial value of 75% and up to be available to everyone, with subsidies if need be.

Insurance industry now speaking against health reform

Per the Washington Post, the health insurance industry, represented by America's Health Insurance Plans, is planning to advertise against the Senate Finance bill. AHIP is citing a study by PricewaterhouseCoopers for the industry; PwC is an accounting firm with a health care consulting practice.

The study reportedly projects that insurance premiums in 2013 for a single person would go up $600 more than they would have without health reform (AP article on Google News). I assume that this finding applies only to rates in the individual market, not to everybody.

I have not seen the study on either AHIP's or PwC's websites. However, the weakening of the individual mandate and subsidies was cited as the main reason in the Washington Post article. I've blogged about that here.

The industry's criticisms are not completely off base. However, it's helpful to think about two separate types of cost here.

First, there's the underlying cost of healthcare. I do not think the industry's complaints are applicable to this cost. In fact, the proposed excise tax on high cost plans is likely to reduce overall utilization somewhat, whereas the PwC study did not attempt to account for this (since not a lot of empirical evidence is yet available on that score). Additionally, health IT and comparative effectiveness research are likely to reduce health care costs.

Second, there's the cost of insurance. It is tied to the underlying cost of healthcare, but also depends on market factors (like how much competition there is between insurers). Additionally, the cost of health insurance for each person will be influenced by the market rating rules. As I stated in my earlier post, the weakened individual mandate and subsidies will mean that some people will simply be unable to afford insurance - not poor enough to get a subsidy, but not rich enough to afford individual insurance. They will either pay the fine or seek a waiver. They'll also get insurance only when they're sick, which does drive up the cost of insurance for everyone else - this is known as adverse selection.

However, there is already a certain amount of adverse selection in individual insurance markets - a number of states already limit or prohibit excluding people based on pre-existing conditions. Additionally, the number of people who won't be able to afford insurance and who can't get subsidies isn't very large. I do not think the adverse selection problem will be materially worse than it is at present. The insurers are also going to get a large influx of new customers to offset that.

The cost of insurance will be higher than it would be if 97+% of the population was insured, as opposed to 94%. However, there's not a good way around the situation. President Obama specified that a bill couldn't raise spending (before offsets) by more than $900 billion, and there's just no way to get subsidies high enough with that amount. The insurance industry is simply going to have to accept the situation and do their best to control costs and increase their own efficiency - which they have failed to do in the past. I don't think the situation is going to be unmanageable, either.

Sunday, October 11, 2009

Equality March in DC - my comments

My wife and I were at the Equality March in Washington, DC just now. While we were waiting to start marching, we saw a rainbow in the sky - it was a beautiful omen, and quite unexpected because there was no rain.

The best sign I saw read "Heteros for Homos".

President Obama has publicly committed to equal rights, but has said that he himself believes that marriage is for a man and a woman. His administration has not made very much progress on its promised agenda to the LGBT community. The folks behind us were criticizing him rather sharply.

In defense of President Obama, it is early in his administration. There is so much on the table that absolutely needs to be done - health reform, cap and trade, immigration reform. The US political system was explicitly designed with a large number of veto players - meaning people who can exercise veto power over legislation. As a result, legislation moves slower than in other countries. The US requires a higher level of overall consensus, especially in the Senate (the senior of the two chambers), to move legislation, and LGBT issues are still very polarizing. Frankly, this legislative inertia is a net negative for the country, but it is what it is and it would take a full-scale nuclear war to change things - and we do not want a nuclear war.

In the US, the immediate symptoms are marriage itself and the benefits that come with it - tax benefits, immigration benefits, inheritance issues, issues in medical care (e.g. being able to visit your partner without challenge in a hospital). Hate crimes legislation is another symptom separate from marriage itself. These symptoms can be fixed through legislation. Some symptoms can probably be fixed with an executive order from the President, which would be faster (ask a lawyer what those are). President Obama and Congress need to move on all these things.

However, the only reason to insist on a separate status for some people, like civil unions for LGBT folks, is because one thinks them inferior. In the long run, separate but equal cannot stand. I think President Obama either knows better, or should know better, than what he has said publicly. Eventually, the world must move towards equal status for LGBT folks. It is unfortunate that Canada and many European countries are ahead of the US in that regard.

Footnote: I say LGBT, short for lesbian, gay, bisexual and transgender, out of habit. It is the acronym under which I was introduced to the community. One of my friends, who is an elder statesperson in the Michigan LGBT community, prefers to say TBLG - putting transgendered folks first, since they are subject to the most discrimination and indeed physical danger.

Saturday, October 10, 2009

WSJ: Swine Flu + Communion = ?

The Wall Street Journal has an article about the impact of the swine flu on Communion practices in U.S. churches. An excerpt:

In many Roman Catholic churches across the country, lay people no longer receive wine at Communion, and some Catholic clergy have advised congregants not to shake hands or hug at the moment of the liturgy known as "the passing of the peace," when parishioners typically greet someone in, and offer embodied signs of, the peace of Christ. In my own Episcopal parish, I was greeted by a neighbor last Sunday with an elbow bump. At a United Church of Christ congregation in the suburbs of Chicago, Communion servers now slice up bread into bite-sized bits before distributing Communion; they no longer offer congregants a loaf from which to tear a hunk of bread. In the interest of keeping fingers away from communion wine, communicants at All Saints' Chapel in Sewanee, Tenn., are now instructed not to dip their Eucharistic bread into the cup but rather to sip the cup directly, since hands are often more infectious than mouths.

At Cornell University, the Episcopal chaplain, Clark West, has reminded worshippers that they will receive the fullness of the Eucharist if they receive only "one kind"—that is, the wafer and not the wine. "We have alcoholics among us for whom this has been the practice for years without any noticeably adverse effects," quips Mr. West. To emphasize this, he has, on occasion, used a longer liturgical formula, which names the host as itself both "the body and blood of our Lord Jesus Christ." Less reverently, Mr. West has taken to calling the bottle of Purell hand sanitizer, which now sits prominently on the credence table, the post-modern lavabo. (A lavabo is the bowl a priest uses to wash his or her hands in the Eucharist.)

These liturgical modifications are, of course, all being undertaken in response to H1N1—or, perhaps more precisely, in response to fears about H1N1. But if H1N1 is new, American Christians' choice to let fears about hygiene and health shape Eucharistic practice are not. In the late 19th century, new knowledge about germs—and pastors' keen desire to be regarded as, in the words of one New York clergyman, "thoroughly imbued with the scientific spirit"—prompted many clergy, especially in Methodist, Presbyterian and Congregationalist churches, to set aside the common cup in favor of individual communion cups (think shot glasses).

That change did not come easily or without debate and old-fashioned organizing on the part of both clergy and physicians. In November 1899, the Brooklyn Pathological Society convened a symposium called "The Pathology of the Common Communion Cup." Doctors and ministers gathered to review what they knew of epidemiology and to urge the use of individual cups at communion. The ministers in attendance did not take much convincing: "My own feeling in regard to the common cup is one of positive repugnance," said one.

Those churches that did move from the common cup to individual cups lost something. They lost the imagery of the church's being, to paraphrase Paul, one body because we drink of one cup. Indeed, fin de si├Ęcle advocates for reform understood quite well that the changes they were making were not just about the health of people's physical bodies, but also about the ecclesial and social body. They urged adoption of individual cups not only because of new theories about germs but also, explicitly, because they were troubled by white, middle-class Christians becoming symbolically joined to other sorts of Americans.

My own church continues to use a common Communion cup, and congregants are encouraged to drink directly rather than intinct (i.e. dip the bread in). We also minister to a large number of homeless folks, many of whom attend service. Episcopal and Roman Catholic churches typically use port wine, which is high enough in alcohol to be fairly safe to drink. In light of the swine flu, perhaps we could pour some whiskey into the wine as well...

New York Times: Prepaid, but Not Prepared for Debit Card Fees

The New York Times has an article about prepaid debit cards in the US. They are attractive to a number of consumers, but are larded with hidden fees.

Buying a prepaid debit card these days is just about as easy as picking up a bottle of shampoo or a candy bar. Walk into a Wal-Mart or almost any major drugstore, and rows of plastic worth $25, $100 and even $500 beckon from kiosks alongside prepaid phone cards and gift cards for retailers.

“No Credit Check. Safer Than Cash. No Bank Account Needed,” says the Green Dot Visa Prepaid Card: Just pay at the register and the card is ready for A.T.M. withdrawals, store purchases and online shopping.

For many people who do not have bank accounts, or cannot get a credit card, the appeal is irresistible, making the reloadable cards among the consumer banking industry’s fastest-growing products. But their convenience comes with a catch: fees, often hidden in the fine print.

The MiCash Prepaid MasterCard docks cardholders a $9.95 activation fee. Like many competitors, it then charges numerous recurring fees, including $1.75 for each A.T.M. withdrawal, $1 for each A.T.M. balance inquiry, 50 cents for each purchase, $4 for monthly maintenance, $2 for inactivity after 60 days and $1 for a call to customer service.

The Millennium Advantage Prepaid MasterCard goes further, listing an application fee of up to $99. The Silver Prepaid MasterCard advertises that it does not charge for overdrafts as many debit cards do, but it gives itself the option of charging a $25 shortage fee if customers exceed their balance.

“It’s a very expensive way to bank,” said Jean Ann Fox, director of financial services at the Consumer Federation of America.

A cottage industry only 10 years ago, reloadable prepaid cards have tapped into the vast pool of about 80 million consumers who have little or no access to bank accounts. The market includes college students who do not want to carry around wads of cash and consumers who do not want to type their credit card number into the Internet.

More typically, it comprises low-income people and immigrants who have fewer financial options than other Americans. Often, they turn to these cards because they cannot open a bank account, or they become fed up with the costs of check-cashing stores or overdraft fees on checking accounts.

Industry officials say the cards are a good deal because users can avoid the fees charged on low-balance bank accounts and at check-cashing stores.

“If you look at these products today compared to even a checking account, many consumers have found that they can be far less expensive,” said Gary Palmer, chairman of the Network Branded Prepaid Card Association.

But even as the industry expands, many prepaid cards continue to charge fees — including for purchases and paying bills — that can quickly accumulate.

Like many workers, Tyrell Blocker, 20, of Brooklyn, could ill afford the surprise when he took such a card last week to a Pay-O-Matic Financial Services store in Manhattan after a bank turned him down for an account because he lacked one of two required pieces of identification. As soon as the cash from his paycheck landed on his card, he noticed fees accumulating. Mr. Blocker returned to Pay-O-Matic to complain and only then was provided a detailed list of more than two dozen fees, he said.

“I need every last dime I got; I’ve got a newborn,” Mr. Blocker said. A spokesman for Pay-O-Matic said the card was fairly new and the firm was working to make the fees more transparent.

Little Regulatory Scrutiny

Because it is a relatively new industry, prepaid cards have not undergone the Congressional and regulatory scrutiny of credit and debit cards. In the spring, lawmakers restricted interest rate increases and hidden fees on credit cards, and regulators are now examining stricter rules on overdraft fees on checking accounts. Even gift cards, which expire when the money runs out, will soon be subject to new rules limiting monthly fees and expiration dates.

Congress has asked regulators to determine if prepaid cards warrant the same protections extended to debit and credit cards. The industry’s trade association says such measures are unnecessary and would make cards more expensive.

But consumer advocates say the lack of regulation means that prepaid card users can continue to be blindsided by hidden fees, and have few legal protections to recover their money if a card is lost or a charge disputed.

In a video interview on the NYT site, Blocker said that he tried to open a bank account, but the bank required two forms of ID. I believe that banks are allowed to require two forms of ID under the Patriot Act, but are not required to do so. Almost all Americans have a driver's license, but poorer Americans may not have any other form of ID. A passport or a birth certificate would probably be common second forms of ID. For poor people, getting a passport may be too expensive. It is harder for the poor to take the time off their jobs to arrange to replace lost birth certificates.

Additionally, the poor transparency of the prepaid card contracts is a further penalty.

These fees tend to be lower than those on commercial prepaid cards. But critics question why there are any fees at all, particularly when the recipients do not have a choice.

“To me, it’s a terrible thing to give people their pay on a card that has fees on it,” said Linda Sherry, director of national priorities for Consumer Action.

Reloadable prepaid cards hardly existed a decade ago. Then, as credit cards surged and the Internet bubble lifted the economy, a handful of companies noticed an untapped market in teenagers who wanted to shop on the Internet, but were not eligible for credit cards. But it soon became clear that the larger market for prepaid cards was people who do not use banks and the uncreditworthy.

In the years since, dozens of companies and banks have latched on, some offering celebrity branding to lure customers. Johnny Cash, Usher, Carmen Electra and the football player Vince Young have all had their name attached to a prepaid card, and the hip-hop impresario Russell Simmons continues to back the RushCard, mainly to African-Americans, as a “better alternative” than banks and credit cards.

But these efforts are not without controversy. Mr. Simmons, for example, has batted down repeated criticism that his card saps money from low-income users. His Pay-as-You-Go card has come under scrutiny for charging a $19.99 activation fee deducted from the cash first loaded onto the card; a $1 convenience fee for the first 10 purchases every month; and a fee of $1 for every bill paid with the card.

Fees Are Declining

Industry officials say fees have been declining, especially after Wal-Mart this year trimmed fees on the MoneyCard Prepaid card it sells, which prompted several other issuers to cut prices too. They add that consumer complaints are rare and that surveys indicate the vast majority of customers like the cards.

An industry-sponsored study by Bretton Woods, a bank advisory firm, said that cards like Green Dot, Wal-Mart and NetSpend are cheaper than a checking account, whose annual cost can be as high as $353, assuming six overdraft charges, compared with $207 for a direct-deposit prepaid card.

Yet in many instances, even the lowest-fee prepaid cards can cost more if consumers are able to avoid bank overdraft fees. That should get easier after several large banks announced recently they would let customers decline overdraft protection.

While most major banks charge $10 or less a month for a low-balance checking account, a survey of two dozen prepaid cards released in August by the Consumers Union, the publisher of Consumer Reports, found that the cheapest, the Wal-Mart Money Card, cost $16.59 in the first month and $21.54 in the second.

By contrast, the most expensive card, the Millennium Advantage card, cost $115.05 in the first month, because of a $99 application fee, and $27.95 the second month, the survey, compiled by Michelle Jun, a lawyer for Consumers Union, showed.

And the actual fees charged can be confusing. A spokesman for the Millennium Advantage card said that while it lists the $99 fee, the company charges only up to $30. A spokesman for the Silver card said that it does not actually charge the $25 shortage fee shown in its fine print, and is working to remove it from company documents.

“How are consumers supposed to keep the fees straight if the companies can’t?” said Michael McCauley, a spokesman for Consumers Union.

In the meantime, bewildered by opaque terms and often dodgy customer service, many consumers are fending for themselves.

Damon Saxton, 34, said he had given up on prepaid cards and hoped to return to a bank, if they will have him. Mr. Saxton began using a prepaid card after being barred from getting a bank account for cashing a check from an eBay sale without realizing it was fake.

But Mr. Saxton, who lives in Florida, said that the two years he used his Vision Premier Prepaid Visa Card were marred by petty fees and horrible customer service.

Mr. Saxton said that when he punched the wrong code into an A.T.M., the bank charged him $2.95 for a declined A.T.M. transaction. When he called to complain, he said, they charged him an additional $1.95. When someone got hold of his card number and racked up several hundred dollars in shortage fees, Vision Premier covered the fees with Mr. Saxton’s tax return, which was directly deposited onto the card, he said.

A spokesman for the Vision Premier said Mr. Saxton’s experience was not the norm. The company eventually refunded the fees.

“I wasted countless hours dealing with this problem, not to mention the stress,” Mr. Saxton said. “I think the whole business is based around nickel and diming.”

The poor need basic checking accounts and debit cards that aren't larded with invisible fees. They have a right to be able to access basic financial services without being effectively taxed on every transaction. Even if prepaid debit cards are cheaper than having a bank account - and note that the results of the Bretton Woods study are sensitive to the assumptions on the number of overdrafts incurred - $207 for a single person making $20,000 (not much above poverty) is paying 1% of their income to these predators. Middle-income people have the slack in their budgets to live with whatever fees and penalties they incur - poor people don't. Bank regulators and policy makers need to look at this issue.

Friday, October 09, 2009

President Barack Obama wins Nobel Peace Prize

From an email sent by the Huffington Post:

President Barack Obama won the 2009 Nobel Peace Prize on Friday for "his extraordinary efforts to strengthen international diplomacy and cooperation between peoples," the Norwegian Nobel Committee said, citing his outreach to the Muslim world and attempts to curb nuclear proliferation.

The stunning choice made Obama the third sitting U.S. president to win the Nobel Peace Prize and shocked Nobel observers because Obama took office less than two weeks before the Feb. 1 nomination deadline. Obama's name had been mentioned in speculation before the award but many Nobel watchers believed it was too early to award the president.

On the other hand, Iain Martin of the Wall Street Journal is quick to criticize the decision:

This is completely bizarre. President Barack Obama has just won the nobel peace prize. It is unclear why. For making peace, of a kind, with Hillary Clinton? For giving up the missile shield and cheering up the Iranians? For preparing a surge of troops and weaponry in Afghanistan?

Of course, traditionally it has been standard procedure that winners of the prize do their peacemaking first and are only given the prize after they have achieved something. But this innovation sweeps aside such old-fashioned notions of reward following effort.

Think about it, it’s so post-modern: a leader can now win the peace prize for saying that he hopes to bring about peace at some point in the future. He doesn’t actually have to do it, he just has to have aspirations. Brilliant.

Perhaps a little too quick, in my opinion.

Thursday, October 08, 2009

Significantly weakened individual mandate in Senate Finance Committee health bill

The Senate Finance Committee has received a cost estimate of it's bill (coverage courtesy of Kaiser Health News). The bill would increase spending by an estimated $829 billion over the next 10 years. All these are offset by tax increases or effective tax increases, so there is an estimated net gain to the federal budget of $81 billion over the next decade.

However, the bill would only increase coverage to 94% of the population over 10 years, up from 83% now. As a result, Sen. Charles Grassley, a conservative Republican from Iowa but also a key negotiator, is balking.

94% coverage is far from ideal. The Congressional Budget Office estimates that the changes to the proposed individual mandate have weakened it substantially.Morningstar has an analysis of the individual mandate issue and some of the other provisions:

Guaranteed Issue, Rate Bands, and an Individual Mandate

Original Bill: The bill would require insurance companies to offer coverage on a guaranteed issue basis, forbidding them from rescinding policies or denying coverage for those with pre-existing conditions. The bill would eliminate medical underwriting, allowing premiums to vary based only on the following characteristics: region, tobacco use, age, and family composition. The bill would require the vast majority of citizens and legal residents to carry health insurance or pay an excise tax. We have long held that in order to maintain the viability of the individual insurance market, an individual mandate--in conjunction with regulations requiring guaranteed issue and non-risk-rated premiums--is a must.

Recent Amendments: During the bill markup, the rating bands were tightened, so that premiums are now only allowed to vary at a 4:1 ratio based on age, or a 6:1 composite ratio within a family category. These restrictions will tend to lower or maintain premium levels for older Americans in the individual market, while significantly increasing premium levels for younger people. The maximum tax penalty for families who fail to carry health insurance was also greatly reduced from the original level of $3,800 per year. In the final version of the bill, the maximum tax penalty per uninsured adult is set at $200 in 2014, $400 in 2015, $600 in 2016, and $750 starting in 2017. Failing to carry health insurance carries no civil or criminal penalty, and interest does not accrue on unpaid excise taxes. The only enforcement mechanism for the individual mandate is for the government to withhold the penalty tax from the uninsured person's annual tax refund. In our opinion, the amendments around the individual mandate have made it almost completely ineffective, which will likely mean lower overall insurance coverage and higher insurance premiums as healthy families become even more likely to opt out of the insurance pool.

What It Means: We think the current version of the SFC bill will have the unintended consequence of significantly increasing premiums in the individual market, especially for younger and healthier individuals, while having minimal effect on the number of people without insurance. We think there is a good chance that the CBO report will agree with this assessment, which will require the SFC or the full Congress to once again strengthen the individual mandate in the final legislation.

Without a stronger individual mandate, we think these provisions could result in more people without insurance, which would be a negative for most health-care companies. On the other hand, if the individual mandate is strengthened, it has the potential to substantially increase the demand for health insurance, which would be a big boost to managed-care organizations. A reduction in the number of uninsured Americans would also result in an increase in the demand for drugs, which would largely offset the pricing concessions and fees imposed on the pharmaceutical industry in other parts of the health-care reform bill. Device manufacturers would also see an uptick in volume.

The Finance Committee weakened the individual mandate due to concerns with people being able to afford insurance. Sen. Grassley thinks the bill is "not much bang for the buck" as a result. My response is that the bill does a lot of other important things - it establishes insurance regulations that will focus insurance companies' energy on increasing their efficiency and health management capabilities, rather than trying to avoid enrolling sick people. It will also establish exchanges where people can go to easily compare and purchase insurance. It will also provide significant coverage to the poor.

Besides, if the bill was expansive enough to cover essentially the whole population, I have a feeling the same critics would be saying it was too expensive. My take: there are things I would improve about the Senate Finance Committee bill. However, it is acceptable with the improvements already made. I urge lawmakers to pass it.