Medical Loss Ratio

The other day I received a letter from my insurance company telling me that I wasn’t going to get a refund. I was reasonably happy about that, actually. The reason has to do with the Affordable Care Act (ACA) and the Medical Loss Ratio (MLR).

The MLR is the ratio of how much money a health insurance company pays out to cover medical expenses versus the amount of money it collects in premiums. An MLR of 75 means that for every $100 the company takes in it pays out $75 in coverage.

An MLR of 75 isn’t good enough anymore. In an amazing denial of insurance company wishes the ACA contains a provision requiring a minimum MLR of 80 for small group policies and 85 for large group policies (over 100 people). Companies that don’t meet this standard have to refund money to their policyholders to the point where they are at an MLR of 80 or 85%.

My health insurance provider has been paying out more than 80% of premiums, so no refund was forthcoming. Other people around the country are getting refunds, however. In Florida, one company is going to be refunding $15.7 million to 67,000 people. That company is called Golden Rule (*cough, hack*). Pardon, a little bile caught in my throat.

The Minor Heretic was once a customer of Golden Rule, back when Lake Champlain was salt water. I was on a budget, and they offered a cheap, high deductible plan. It was a good thing that I was healthy, because they provided an empty parachute pack. Look up “Golden Rule Insurance review” online and you will find a string of stories from people who were denied coverage, dropped when they got sick, or had their rates doubled or tripled without warning. Behavior like this did wonderful things for GR’s MLR. I found out while I was throwing my money down their gold plated toilet that their MLR was 52. They pocketed 48% of every premium dollar. More recently, in 2010, their MLR in Florida was 65.

No more. Thanks to that goddamned socialist ObamaCare that is going to enslave us all, health insurance companies can no longer gouge us. At least, not much.

Speaking of socialism, the MLR for Medicare, run by those bloated, inefficient, wasteful bureaucrats, is 97. No private insurance company comes near that, of course. That’s why they bribed, er, lobbied so hard against the public option provision when the ACA was being written. They simply couldn’t imagine competing with a program with only 3% overhead.

It would be a huge fight, but adding a Medicare-like option to the ACA would legitimize the “Affordable” part of the name. It would drop insurance costs by 15% or more, and might very well kill off a major part of the quasi-criminal health insurance industry.

For the moment I’ll appreciate not being screwed so badly by my insurance company. Down the road I look forward to Vermont becoming the first state with public single payer health coverage. Perhaps, eventually, all of America will realize that getting health insurance doesn’t have to mean wasting money.

A Penny Borrowed is a Penny Earned

Record low 10-year bond interest

Back in December I wrote about how the U.S. government was enjoying what amounted to negative interest rates on treasury bonds. That is, the rate of inflation, low as it was, exceeded the interest rate, meaning that we could make money by borrowing money. It was a case of international investors looking at the Euro crisis and other factors and paying a slight premium to safely store their money.

It is still the case. In fact, the interest rates our government pays on 10 year bonds is hovering around a record low of 1.44%. We just sold $21 billion of these bonds at 1.46% a few days ago. Inflation has been in the 2-4% range for the past year, dropping to 1.7% as of May. When we pay off that 1.46% interest with money that buys 1.7% less we are making 0.24% on every dollar we borrow. If inflation holds steady we'll make  $50 million on that bond sale over the next year, or half a billion dollars over the life of the bonds. If inflation goes up, we'll make more. It's Alice-in-Wonderland weird, but it's a good kind of weird.

The policy implication is straightforward. The government should borrow a huge whack of cash and spend it on useful things. I'd suggest repairing our maintenance-starved transportation infrastructure, especially our freight and passenger rail lines. Energy effiicency and renewable energy would be good investments, as would education at all levels. Whatever. Employ some people and get them spending. That would tend to push inflation up by a point or two, so we'd be making some real money on those 1.46% bonds. We'd also be collecting more tax revenue from all those newly employed people to pay off the loans in slightly inflated dollars. The bond market is saying "Borrow my jumper cables to restart your car and I'll give you a buck." As long as the interest rate is below the inflation rate and unemployment is unacceptably high it is idiotic not to borrow.

To the fiscally shocked I say yes, yes, of course we will have to pay it off. Right now we are looking at a federal deficit of $900 billion for fiscal year 2013. How can we deal with that? As I have suggested in the past:

Actually enforce tax laws against multi-millionaires who illegally offshore income: $70 billion a year

Close loopholes on corporate offshoring of income: $90 billion a year

 Cut the military budget so that we spend as much as the next 5 nations combined instead of the next 14 combined: $310 billion a year (I should note that 2 of the 14 are China and Russia and the other 12 are friendly countries such as the UK, France, and Japan.

Include a drug benefit in traditional Medicare and negotiate drug prices with manufacturers: $40 billion a year

Let the Bush-era tax cuts expire: $280 billion a year

There's $790 billion and I haven't even touched oil company subsidies. It is eminently doable, post campaign finance reform. Right now we can borrow at a profit and solve our unemployment problem. Later we can boot the moneybags out of our electoral system and solve our structural debt problem. The numbers speak to those not blinded by ideology.

Another Reason to Love the 4th of July, or the 3rd

The small town parade. The thing I love the most about a small town parade is the improvisational aspect to it. Unlike the big money extravaganzas in major cities there is some room for surprise and low budget ingenuity. The Montpelier 3rd of July parade is full of both.

(Side note - yes, the 3rd. I believe that the main reason some towns celebrate a day early is because the fireworks companies are overbooked on the 4th and offer a discount. It's actually 50% more historically accurate, since the Declaration of Independence was ratified on the 2nd. John Adams thought that the 2nd should become our national holiday. )

The parade lines up in a network of low-traffic residential streets in a section of Montpelier called The Meadows. Under the direction of volunteer marshals the various pieces are threaded together and march off towards the center of town. The Librarian and I were watching the parade start up when the best float ever rolled by. Click on the photo below for an enlargement.

What do we have here? Something that looks like a large copy of the Declaration on the back. A pole wrapped in spangly Christmas boa decoration holding four flags up front. A guy in a George Washington costume. So far, so...wait, is that an Imperial Storm Trooper from Star Wars?

It is. With a ray gun.

Apparently he's about to pop a cap on that miniature deer near the flags. It also looks as if George and the Trooper have a campfire all ready to cook up some venison while they discuss inalienable rights, consent of the governed, and the chickenshit bureaucracy that is the despair of all front line soldiers.

But really, what is an Inperial Storm Trooper doing on a float with Washington, the Declaration, and a stunted deer? Is it some kind of revolutionaries vs. empire, endless struggle of mankind sort of symbolism? Or am I overthinking this? I'm trying to imagine the thought processes of the people planning the float.

"It's looking a little sparse, y'know?"

"Well, we added the deer."

"Yeah, it looks kinda woodsy, with the campfire, maybe a little Valley Forge thing going there."

"We need another guy in uniform up there. Who has a Revolutionary War outfit?"

(Silence)

"Civil War?"

(Silence)

"French and Indian War? War of 1812? Spanish American War? World Wars? King Philip's War?"

(Pause)

(From the back) "Um, how about Star Wars?"

And so it came to be. Best float ever.

The course of human events

It being the fourth of July, I am musing on our founding document, The Declaration of Independence. One of the many things about it that interests me is the change in its significance between the time of its drafting and the end of the 18^th century.

It was a legal sledgehammer when it was first ratified. It was a declaration in three different ways.

First, it was a declaration of basic human rights and that a government derived its legitimacy from honoring and actively serving those rights. It also based that legitimacy on the consent of the governed. These were novel concepts for a political document at that time.

Second, it was a declaration of the many violations of these principles by the existing government.

(Some of the points made were perfectly valid and some were hyperbole. In particular, there is a reference to the so-called “Boston Massacre”: “For protecting them [Note: British troops], by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States” The event in question involved seven British soldiers facing down a rock throwing mob estimated in the hundreds. John Adams himself successfully defended the soldiers in front of a jury.)

Third, it completed the syllogism and declared that the acts laid out in the middle of the document violated the principles of the first section, thus delegitimizing British rule and necessitating the separation. It was brief, logical, and earth shattering.

It became legally irrelevant almost immediately. The Continental Congress drafted articles of confederation, defining the relationship of the colonies to one another and to the world, as well as a method of governance. The United States fought the revolution and defined itself by force of arms as well as force of rhetoric. The Declaration of Independence, having served its purpose, became an historical document, an inspiration rather than a legal force. The drafting of the Constitution put the Declaration behind glass, so to speak. The success of the Declaration put it into the archives.

It is also interesting to look at the nature of the complaints listed in the Declaration. Much is made of the subject of taxation as a source of revolutionary discontent, but that was only one of twenty-six points. Ten of the complaints concern the ability of the colonists to have functioning legislatures and to pass necessary laws. Four concern judicial matters, including judicial independence and trial by jury. Four complain about the imposition of military presence and dominance.

It is intriguing to note, in light of recent battles over immigration policy, that the Founding Fathers were upset at the British government for “obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither”. They wanted to make it easier for people to immigrate.

On a somber note, these two points:

“For depriving us in many cases, of the benefits of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences”

Guantanamo, indefinite detention, drone strikes, and rendition come to mind.

The final complaint refers to “the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.” Our extensive and careless use of aerial bombing over the past few decades makes the Iroquois look like amateurs in the slaughter of innocents. When unintended consequences become common and predictable they become part of our intent, and therefore part of our moral responsibility. The redefinition of “militant” as “any man unlucky enough to be near an exploding drone-fired missile” is a transparent coat of whitewash over the “undistinguished destruction” our founders deplored.

So, there is unfinished business on this Fourth of July. Or, as one of the signers of the Declaration, Benjamin Rush put it, “The American war is over; but this far from being the case with the American revolution. On the contrary, nothing but the first act of the drama is closed.”

The Real World

I realize I’ve been away from the blog for almost a month now. It has been a busy month, but mostly a good one. Your Minor Heretic has projects on top of projects. That aside, I rely on inspiration for my blogging. It shows up or it doesn’t, and I am resisting the lazy practice of posting pieces that say little more than “Hey, look at this!”

I was at the local farmer’s market on Saturday morning. It was a sunny, flawless morning, and the crowds were out. A local folk duo played and sang. A high school kid I know performed juggling and acrobatics to raise money for a circus school scholarship. I bought greens, artisanal cheese, locally baked bread, and a maple glazed cinnamon bun for The Librarian’s lunch.  Bliss.

Part of the market experience is meeting half a dozen friends and having a series of conversations. I met up with an old friend who is a dedicated peace activist and we exchanged greetings. I said something about the glorious day, and then something about how this market, the local meeting place, is what the good life is all about. He agreed, and then made an important point: Part of a living, vibrant community is coming in contact with people you wouldn’t ordinarily, voluntarily associate with. It means dealing with people who annoy you, who disagree with you, and who might find you slightly off-putting in the same way.

He was right. Mixing with everyone, not just your in-group, is important for full personal development and for functional civic life. That’s one thing that Vermont has going for it. Most of us live in small towns. Anonymity is not an option. Clustering with absolutely like-minded people is theoretically possible, but the rest of the population keeps leaking in around the edges. Our geography and small population push us up against each other, but unlike a big city, we are going to see these people again and again. We have to deal with our differences in a civil way.

The same goes double for town meeting. Any moderately sentient resident can stand up and speak. And we do. Unlike the so-called town meetings arbitrarily staged by politicians, we actually have to make some decisions together by meeting’s end. And, unlike those who attend the theatrical forums for posturing and bile, we have to see each other and interact in the days and months after the budget is passed and the church supper is but memory.

I’m a member of our neighborhood online forum. It is restricted to residents of our town, and mostly concerns itself with goods needed and offered, comments on road conditions, wildlife sightings, lost pets, and local events. It is nothing earth shattering in itself, but the key to its virtue is that it engenders a thousand small, face-to-face interactions between people who might otherwise not meet. When I say meet, I mean a real personal meeting, not a nod on the street or a public exchange over a school bond issue. Each meeting is a chance to see another human being as an individual, not an archetype. It humanizes us to each other. It is those endless mundane contacts that provide the glue of a civil society.

My conversation at the market reminded me of a passage from a speech given by the headmaster at The Mountain School, Mac Conard. (I was a student there back in the late 70s) The Mountain School was small, just a few dozen students, isolated on a hilltop farm in Vershire Vermont. We raised a lot of our own food and did most of the physical work around the place. I’ll have to paraphrase what Mac said, but he remarked on the expression, “the real world.” People said to him, “This farm on a hill in the woods is all very nice, but what about teaching these kids about the real world?” Mac responded that this was the real world. Forests and fields, wild and domesticated animals, gardens, chores, and getting along with people you can’t escape – these are the elements of the real world. Cities, high technology, easy mobility and anonymity are common in this country, but these things are also artificial. Ubiquity doesn’t make them any less contrived.

I am concerned with structure. As Herodotus wrote, “Circumstances rule men; men do not rule circumstances.” It is the structure of our social institutions, our architecture, our urban design and our daily lives that pushes us this way and that. Anonymity and isolation are seeds of inhumanity. It is important to build into our society the structures that bring us together, face to face, over and over, even when we annoy each other. It is that repetition, those thousands of unremarkable little interactions that convince us of each other’s humanity. Knowing each other allows us to disagree without contempt. Knowing that we will meet again allows us to lose the argument, this time, with some amount of grace.

So here’s to farmer’s markets and concerts on the green. Here’s to the dog walkers in the park and the people taking their own sweet time about their errands downtown. Here’s to town meeting and this meeting and that meeting and that guy I always disagree with. Here’s to benches and porches and parks. Here’s to wide sidewalks and narrow diners. Here’s to potlucks and work parties and the people down the road having a lawn sale. It all adds up to the real world.

Update on Sunday, August 19, 2012 at 10:23PM by Minor Heretic

A big welcome to the people of Venezuela. For some reason this post has been getting a large surge of hits from your country, plus some from Sweden, France, Germany, China, and a dozen other places around the planet. Anybody care to enlighten me as to the why and how of the international popularity of this post? If you have an idea, please respond with a comment. Just curious. Thanks

M.H.