Relevant and even prescient commentary on news, politics and the economy.

What to do with the Euro ?

G. has to leave the Eurozone. No not Greece Germany.

Germany and a bunch of small Northern countries use the undervalued Northern Euro as their currency while we use the over valued Mediterranian and Irish (or Catholic and Orthodox) Euro. We need one more flexible exchange rate somewhere between them and the Sea.

If Greek politicians so much as mention the possibility of bringing back the Drachma everyone will take their Euros out of Greek banks before they become Drachmae. This may be necessary, but it won’t be pleasant. Also I would try to get my Euros out of Italy before they turned into Lire if they did (I’d probably fail — but I’d try).

But If Germany switches from Euros back into Deutchsmarks no one will panic. They always disliked the Euro. Now the Euro dislikes them too. It’s time for a divorce.

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Where’s Daniel Becker when you need him??

‘Small business representative’ still has some meaning for people, but of course the term is gamed constantly in the political arena. Via Alternet comes this example:

This morning, NPR’s Yuki Noguchi wanted to know how an ordinary small business owner feels now that the Obama health care law has been upheld. So she turned to this guy:

Well, as it turns out, Joe Olivo of Perfect Printing turns up quite a bit in public discussions of this and other issues. Here he is testifying against the health care law before House and Senate committees in January 2011. Here he is on the Fox Business Network around the same time, discussing the same subject. Here he is a few days ago, also on Fox Business, talking to John Stossel about the law. Here he is discussing the same subject on a New Jersey Fox affiliate.
And here he is in July 2010 discussing small business hiring with Neil Cavuto on Fox News. Here he is opposing an increase in the minimum wage in an MSNBC debate a couple of weeks ago.

Go to many of these links and you find out something about Joe Olivo that NPR and NBC didn’t tell you: he’s a member of the National Federation of Independent Business. NFIB’s site and YouTube page promote many of Olivo’s public appearances. He was the subject of an NFIB “My Voice in Washington” online video in 2011.

NFIB, you will not be surprised to learn, is linked to the ALEC and Karl Rove’s Crossroads GPS, and to the usual rogues’ gallery of right-wing zillionaires.

So Joe Olivo isn’t just some random business owner — he’s dispatched by NFIB whenever there’s a need for someone to play a random small business owner on TV.

The law will give some small businesses tax incentives to pay for employee health care. Starting in 2014, those with 50 or more employees will be required to provide it.

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Guest post: Health Insurance Rebates Show How Bad Insurers and State Regulators Can Be

There is and will be a lot of conversation about the efficacy of the ACA (Affordable Care Act), whether it is a step to deal with the health care cost juggernaut or mostly a boon to private insurers.  What is true is that ‘medical inflation’ has resumed to previous levels of year to year increase after a lull during the last two years, except for Medicare, which comes in at about 3% and not the 9% for the commercial market. (post to come).  

Bruce Webb pointed to the medical loss ratio as a way to help control some costs several years ago. Kenneth has his own take on these issues.

Update 2:   Links repaired

by Kenneth Thomas

Guest post: Health Insurance Rebates Show How Bad Insurers and State Regulators Can Be

Health Insurance Rebates Show How Bad Insurers and State Regulators Can Be

Thursday’s health care ruling was a surprising victory for the middle class. I went to bed Wednesday dreading waking up, only to be awakened by a phone call that the law had been upheld. Most of the story is well-known, and summarized in the President’s speech: six million young adults under 26 who have gained insurance, children now (and adults starting in 2014) can no longer be denied insurance due to pre-existing conditions, an end to terminating people’s insurance when they get ill, closing the Medicare donut hole, etc. I want to focus on one provision the President mentioned in passing, the $1.1 billion in insurance rebates that 12.8 million Americans will be receiving August 1.

The rebates are due to the medical loss ratio or “80/20” rule that insurance companies cannot spend more than 20% of premium dollars on “administration, CEO pay, and profits,” as Health Care for America Now (HCAN) summarizes it. The requirement is 85% spent on actual medical care for firms in the large group market, according to healthcare.gov.(via HCAN). Of the $1.1 billion in rebates, $393.9 million will be in the individual market, $386.4 million in the large group market, and $321.1 million in the small group market.
Although $1.1 billion in rebates is not a lot of money in the multi-trillion U.S. health care system, it is enough to provide noticeable rebates to millions of consumer before the November election. Consumers Union has a state-by-state breakdown of which insurance companies owe rebates in each state, and how much. Three patterns emerge from these data: First, some companies routinely failed to meet the 80/20 rule in state after state after state. Second, Blue Cross/Blue Shield companies, which were once largely non-profit but were converted to for-profit corporations mostly in the 1990s, are now frequent violators of the medical loss ratio rule. Third, some states, most notably Texas, have such lax insurance company regulations that violations of the rule are rampant. The data below come from the Consumers Union link above.

1) Multiple violations by individual companies: The poster child for gouging consumers and spending premium dollars on things other than health care is Golden Rule Insurance Company (since 2003 a subsidiary of UnitedHealthcare), which operates solely in the individual market, and not in either the small group or large group health care markets. According to the Consumers Union data, Golden Rule owes rebates in 23 states where it operates. Comparing the CU data with Golden Rule’s website on where it operates, we find that in only nine states where it operates does it not owe rebates. We also learn that two Golden Rule subsidiaries also owe rebates, American Medical Security Life Insurance Company in Utah in the individual market, and Oxford Health Plans of New Jersey Inc. in the large employer market, bringing Golden Rule’s total to fully 25 states where it owes rebates under the medical loss ratio rule. In a number of states (Alabama, Florida, Indiana, Kentucky, Maryland, Michigan, Mississippi, and West Virginia) , Golden Rule owes more money than any other insurer in the individual market.

Furthermore, UnitedHealthcare subsidiaries carrying the UHC name owe rebates in 28 states in the small business market, large business market, or both.

I don’t mean to single out UnitedHealthcare for overcharging: depending on the state and the market, Aetna, Connecticut General, and Time Insurance Company, among others, owe substantial rebates to their customers as well. But Golden Rule and UnitedHealthcare failed to meet their 80/20 tests in so many states that they really stand out.

2) In many states in which Golden Rule does not owe the highest rebates in the individual market, Blue Cross/Blue Shield does. This includes states like Arizona, Missouri, Oklahoma, South Carolina, Tennessee, and most notably, Texas. This represents a complete repudiation of the historical BC/BS ethos, which included non-profit incorporation and community rating (i.e., not penalizing people for getting sick). But that’s what happens when you turn non-profits into for-profits in health care.

3) This brings us to lax insurance regulation, as in Texas. Blue Cross/Blue Shield of Texas owes $89.9 million in refunds, all of it in the individual market, which by itself exceeds all the refunds in the much bigger California economy, where total refunds only amount to $73.9 million. Total rebates in Texas will total $167.0 million. The only other state with rebates exceeding $100 million this year is Florida, at $123.6 million. However, a number of states have higher average rebates, led by Vermont at $807. I believe both the total and average rebates should be examined for evidence of weak insurance regulation.

To summarize, the Supreme Court’s decision was a great one for the middle class. On top of all the provisions that expand coverage and economic security, 12.8 million consumers will see refunds from their insurers to pay back for their price gouging.

This is not to say that we don’t have a long way to go to complete health reform. As Aaron Carroll points out, there is a great deal more that needs to be done to our $2.7 trillion health system, including making coverage universal and getting cost increase under control. But upholding the Affordable Care Act is a step in the right direction.

crossposted with Middle Class Political Economist

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A Stochastic observation on Fast and Furious

lifted from Robert’s site:

Katherine Eban reported in the notorious left wing rag “Fortune” that everything Republicans have been saying about “Fast and Furious” up until yesterday when they found Eric Holder for contempt of Congress (for only handing over 7,600 pages of documents and insisting that ongoing investigations are protected by executive privilege) is nonsense.
 
Senator C. Grassley (or his office) replied.
 
The response from Grassley is a non denial denial. He (or his office) writes that the key issue is that the BATF “encouraged” gun sales. The previous line had been that the BATF “allowed” gun sales. The original claim is important, since it implies that the BATF could have prevented the gun sales. Grassley (and his office) no longer stick to their previous claim that this has been demonstrated.
 
I stress that I use the word “previous” refers to the previous sentence. In one sentence Grassley (or his office) asserts that the claim that the BATF could not stop the guns is inconsistent with the evidence. In the following sentence he (or they) argue in the alternative that it doesn’t matter if the BATF could or couldn’t stop the trafficking.

The central claim of the article, that there was nothing ATF could have done to stop the illegal sales, is simply incompatible with the evidence. If it is true that ATF could not interdict and seize weapons due to legal hurdles beyond its control,

I believe that’s called arguing in the alternative. Something defence attorneys can do, but prosecutors better not. Don’t you think that after months of investigation Grassley (and his staff) should know if the BATF can or can’t stop gun sales ? Yet he (or they) claim no knowledge of relevant law and make no assertions one way or the other about legal advice from the US Attorney’s office (which is notably part of the same Justice Department so they can harass Holder over that instead).

via Mother Jones

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Big government pushed by the right

Dean Baker notes that liberals have let the right wing get away with the small government mythology…

It is astounding how liberals are so happy to work for the right by implying that conservatives somehow just want to leave markets to themselves whereas the liberals want to bring in the pointy-headed bureaucrats to tell people what they should do. This view is, of course, nonsense. Pick an issue, any issue, and you will almost invariably find the right actively pushing for a big role for government.
…These TBTF banks operate with an implicit subsidy from the government. Lenders expect the government to step in to back up these banks’ debt if they fail, as happened on a massive basis in 2008. As a result, TBTF banks can borrow money at lower interest rates than would be possible in a free market.
…To take another easy example, drug patents raise the price of prescription drugs by close to $270 billion a year above their free-market price. This is roughly five Bush tax cuts to the wealthy…
…Patents imply very big government since the government will imprison anyone who produces a drug without the patent holder’s consent. In recent years, big government has been actively working to extend Pfizer’s and Merck’s patent monopolies to the rest of the world through NAFTA, CAFTA, and other recent trade deals.
…While the government has been using the banner of “free trade” to drive down the wages of manufacturing workers, it has simultaneously been increasing the protection afforded doctors in order to prevent any similar downward pressure on their wages…

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