ACA is Not Affordable | 87% Need Federal Aid for Premiums | Ultimately Care Will Need to Be Rationed | 2017 Price Shock Looms

The news cycle is markedly slower over the holidays.  But unlike most of the world, the joy of Obamacare doesn't vacation.  There have been a number of developments since Christmas that, when pieced together, paint a not-so-festive picture of Health Reform's overall affordability.  The first comes to us from Paul Bedard at the Washington Examiner: 

87% of people who just signed up for Obamacare are getting financial assistance to lower their premiums, according to the Department of Health and Human Services. 

That is a jump from 80% during the last open enrollment period. 

The department did not say how much it was offering to new Obamacare enrollees or what the total bill to taxpayers would be. 

Just a wee bit ironic for a law labeled as the Affordable Care Act, don't you think?  But lets give the benefit of the doubt to its drafters and assume that affordability was meant to be adjudicated after the receipt of federal tax dollars.

In fact, premiums are affordable for many folks at or under 2.5 times the federal poverty level.  But then we must look to the law's affordability at the point of care and how well healthcare users can rely on PPACA insurance to get them the services they need.  That points us to the latest from Obamacare designer, Professor Jonathan Gruber, as reported in the Daily Caller by Patrick Howley:

President Obama’s health care adviser Jonathan Gruber said that the Affordable Care Act would definitely not be affordable while he was writing the bill with the White House.... 

Gruber said that Obamacare had no cost controls in it and would not be affordable in an October 2009 policy brief.... At the time, Gruber had already personally counseled Obama in the Oval Office and served on Obama’s presidential transition team. Obama, meanwhile, told the American people that their premiums would go down dramatically. ... 

Gruber also said that the only way to control costs is to effectively deny treatment.  

“The real substance of cost control is all about a single thing: telling patients they can’t have something they want. It’s about telling patients, ‘That surgery doesn’t do any good, so if you want it you have to pay the full cost.’”

Ah, there is nothing like a lump of denial in your Christmas stocking.  And as to the future affordability of PPACA, this is from Stephen Parente, health finance professor at the University of Minnesota, as summarized by the NCPA:

[P]remiums are lower than they would otherwise be because of two temporary Obamacare programs that help insurers keep costs down. But those programs expire in 2017, and that's when ... big rate hikes will come.   

Risk corridors and reinsurance are two Obamacare programs that are slated to run through 2016. Risk corridors transfer funds to insurers whose costs are higher than expected, while reinsurance compensates insurers whose enrollees have medical costs above $45,000 in a single year.... 

According to ... research [from] the University of Minnesota, premiums after 2016 will increase quickly, especially for cheaper plans. Bronze family plans could rise by 45% (from $9,000 to $13,000) while individual plans could skyrocket by 96% (from $2,000 to $4,000).... [ultimately resulting in an] uninsured rate could reach 40 million within 10 years -- 10% higher than the uninsured rate today. 

  

Study: Weight Training is Better Than Cardio Exercise for Keeping Abdominal Fat in Check

• Researchers measured the activity levels of over 10,000 men aged 40-plus, monitoring their weight and waist circumference over a 12-year period.
• They found that those men who spent 20 minutes a day weight training gained less abdominal weight over the course of the study than men who spent that time doing aerobic exercise. 
• Combining weight training with aerobic exercise led to even better results, the study found.

This is from the Harvard School of Public Health: 

Healthy men who did twenty minutes of daily weight training had less of an increase in age-related abdominal fat compared with men who spent the same amount of time doing aerobic activities, according to a new study by Harvard School of Public Health (HSPH) researchers and colleagues. Combining weight training and aerobic activity led to the most optimal results. Aerobic exercise by itself was associated with less weight gain compared with weight training. ... 

“Because aging is associated with sarcopenia, the loss of skeletal muscle mass, relying on body weight alone is insufficient for the study of healthy aging,” said lead author Rania Mekary, a researcher in HSPH’s Department of Nutrition and assistant professor of social and administrative sciences at the School of Pharmacy of MCPHS University. “Measuring waist circumference is a better indicator of healthy body composition among older adults. Engaging in resistance training or, ideally, combining it with aerobic exercise could help older adults lessen abdominal fat while increasing or preserving muscle mass.” 

Prior studies had been focused on a specific population (e.g. overweight or with type 2 diabetes) and were of short duration and had mixed results. The new study was long-term with a large sample of healthy men with a wide range of BMI (body mass index). 

Mekary and colleagues studied the physical activity, waist circumference (in centimeters (cm)), and body weight of 10,500 healthy U.S. men aged 40 and over participating in the Health Professionals Follow-up Study between 1996 and 2008. Their analysis included a comparison of changes in participants’ activity levels over the 12-year period to see which activities had the most effect on the men’s waistlines. 

• Those who increased the amount of time spent in weight training by 20 minutes a day had less gain in their waistline (-0.67 cm) 

• Compared with men who similarly increased the amount of time they spent on moderate-to-vigorous aerobic exercise (-0.33 cm), and 

• Yard work or stair climbing (-0.16 cm). 

• Those who increased their sedentary behaviors, such as TV watching, had a larger gain in their waistline. ...

An American Single Payer Healthcare System "Would Cost an Absolutely Breathtaking Amount of Taxpayer Money, As Vermont Just Found Out"

This is an excerpt from an excellently written and well reasoned column from Megan McArdle writing at Bloomberg:

Vermont decided to scuttle its single-payer health-care plans ... for one simple reason: A single-payer system would cost too much. When faced with the choice of imposing double-digit payroll taxes or dropping his cherished single-payer plan, the governor of Vermont blinked. ...

There is nothing about single payer that will magically allow us to cut costs to European levels. People who believed otherwise were substituting a crude eyeballing of international statistics to substitute for reasoned analysis, in part because it told them what they wanted to be true: that they could have the universality and progressiveness of a single-payer system without having to ask the taxpayer for a giant heap of money to provide those benefits. They were, in the words of one of my favorite public-policy professors, "getting high on their own supply."...

Our spending is indeed high compared with the rest of the world, but that's because it started high. And while restraining government spending is easy, it is a walk in the proverbial (government-funded) park compared to actually cutting spending. Cutting spending means that a number of people are going to lose income and employment. They will have trouble paying their mortgages, car loans and little Johnny's bill for travel soccer. Then they are going to get organized and march on Washington and vote against the politicians who cut their jobs. ...

Health-care jobs are steady and well-remunerated compared to whatever else those workers could be doing. And that's not just true of the much-derided "specialists" who do too many procedures and charge too much; it's true of everyone in your hospital and doctor's office, from your beloved family physician to the woman who draws your blood. All those people have spent long years working to get where they are. If you suddenly change the rules and take that all away, their rage will burn with the righteous fire of a thousand suns.

So even if we could have had a much cheaper health-care system if we moved to single payer in 1970, that doesn't mean that we can get the same happy results by doing so now. Today we'd be building a single-payer system with the price schedule of our current health-care workers. Which means it would cost an absolutely breathtaking amount of taxpayer money, as Vermont just found out. ...

The U.S. health-care system may be all kinds of screwed up. But at least at this late date, single payer is not the cure for what ails it.

  

Sample Language for Employee Communication Explaining the PPACA Look-Back Measurement Method for Determining Benefit Eligibility

This is from Alden Bianchi and Edward Lenz at Mintz Levin:

[S]ome employers have sought to explain the look-back measurement method in a separate memorandum or other informal communication to employees. Not a bad idea in our view. Nothing prevents an employer from supplementing the formal ERISA disclosure requirements, and better and more complete communication benefits both the employer and the employee. Set out below is a sample of what such a communication might look like: 

The Affordable Care Act (ACA) imposes new rules governing offers of group health plan coverage by employers to their full-time employees. For this purpose, we have chosen to determine which employees are full-time employees under the “look-back measurement method.” These rules are explained at some length in our plan’s summary plan description (SPD), which is available at [describe]. The purpose of this memorandum is to describe how the look-back measurement method applies to both newly hired and other (ongoing) employees. These rule are important, since they determine the circumstances under which employees qualify for coverage and when.

Upon hire an employee will be classified as full-time, part-time, variable hour, or seasonal.

• A “full-time employee” is an employee who is expected to work on average 30 or more hours per week during each calendar month.

• A “part-time employee” is an employee who is not expected to work on average 30 or more hours per week during each calendar month.

• A “seasonal employee” is an employee who is hired into a position for which the customary annual employment is six months or less.

• A “variable hour employee” is an employee who we cannot determine is reasonably expected to be employed on average at least 30 hours of service per week during his or her “initial measurement period” (i.e., the 12-month period commencing the first day of the month following date-of-hire) because the employee’s hours are variable or otherwise uncertain.

Employees classified as full-time will be eligible to participate in our plan on the first day of the calendar month immediately following three full months of employment (but only if they are still employed on that day). Part-time, seasonal and variable hour employees must first complete a 12-month initial measurement period (that starts on the first day of the month following date of hire) during which they are not eligible to participate in the plan. At the completion of the initial measurement period, an employee who has worked on average at least 30 hours of service per week during that period will be eligible for coverage on the first day of the next month (i.e., 13-and-a-fraction months after his or her hire date). Employees who qualify for coverage under this rule will remain eligible for a 12-month period (called the “stability period”) irrespective of their hours, provided they remain employed. An employee who fails to work on average at least 30 hours per week during his or her initial measurement period is not eligible for coverage during the corresponding stability period. 

Employees who have been employed for some time are subject to similar rules, except that the testing period is a fixed, 12-month period that runs from November 1 to the following October 30. This period is called the “standard measurement period.” Once an employee has worked through a full standard measurement period, he or she is no longer classified as full-time, part-time, seasonal, or variable hour. He or she is instead an “ongoing employee.” An ongoing employee who works on average at least 30 hours of service per week during any standard measurement period will qualify for coverage during a stability period, which is the immediately following calendar year. An ongoing employee who fails to work on average at least 30 hours per week during any standard measurement period is not eligible for coverage during the corresponding stability period. 

There are rules that govern the transition from newly-hired to ongoing employee that will affect when coverage might be available. In addition, where an employee experiences a break-in-service of at least 13-weeks, he or she may be treated as newly-hired upon their return. A similar result occurs under a “rule of parity” where a rehired employee may be treated as a new employee following a break of at least four weeks if the employee’s break in service is longer than the employee’s period of service immediately preceding the break in service. 

If you have question about how these rules affect you, please call or contact [insert contact information].

Note: This notice makes some assumptions about the employer’s choice of measurement periods. Other options are available, of course. Many employers have selected an 11-month initial measurement period, for example. This allows for a two-month administrative period during which an employee may be enrolled in the plan. Also, there is no requirement that the standard measurement period begin November 1, but the period between the end of the standard measurement period and the commencement of the corresponding stability period must not exceed three months.

  

The Sony Lesson for Employer Wellness Programs - Start Saving for Your Legal Defense Fund

41 Million Reasons Not to Implement an Employer Sponsored Wellness Plan

This is from Shannon Pettypiece at LifeHealth Pro / Bloomberg:

The recent hack of Sony Corp. -- in which health information on more than three dozen employees was stolen from the company’s servers -- is highlighting the amount of medical data proliferating outside of doctor’s offices in electronic form, and how vulnerable the records are to theft. Corporate wellness programs have become one of the biggest areas where health data is being collected, with hundreds of vendors amassing millions of pieces of intimate and potentially embarrassing health information on American workers. ... 

About 80 percent of large employers are running wellness programs that ask workers to share detailed health information on themselves, and about a third of them require employees to pay additional costs of as much as $1,600 a year for not participating....

Since 2009, there have been 1,187 incidents where health information protected by HIPAA was hacked, improperly disclosed, lost or stolen involving more than 41 million individuals, according to reports to the U.S. Department of Health and Human Services. 

The emphasis added is mine. 

More Evidence Mounts: Corporate Wellness Programs Don't Save Money - Published ROI Pitches 'Rarely' Met

This is from Bill Leonard writing at SHRM:

The evidence is pretty conclusive that wellness programs with clinically driven components that rely on biometric screening do not provide the returns and cost reductions that employers have been promised for years,” said Vik Khanna, a health benefits consultant based in St. Louis and co-author of the e-book Surviving Workplace Wellness (THCB Press, 2014). “If you look at the Fortune 1,000 companies that have made biometric and clinical screening a big part of their wellness plans, the numbers simply do not justify the cost. The return on investment for these type programs just isn’t there, and the impact on improving the overall wellness of program participants has been negligible.” 

Khanna contends that biometric screenings such as checking cholesterol levels and blood pressure identify health risks and conditions that typically affect older workers. “So, employers end up spending a lot of money on these screens upfront for very little immediate result,” he said. “Most of the issues that these tests screen for are conditions that primarily affect people who are in their 60s or 70s. Therefore, the actual cost impact of these chronic conditions is delayed or won’t be felt at all as workers move on to other jobs.” 

The goals of most corporate wellness plans that use clinical screenings are to moderate or change employee behaviors and to help workers develop healthier lifestyles. However, sources familiar with this issue agree that these goals are rarely met. 

“If the objective is to change employee behavior, then a biometric screening is a pretty ineffective way to do it”....

 

Congress Passes Bill Allowing Disabled Persons to Save Up To $14,000 Per Year in Nontaxable Accounts

While this legislation creates another incentive for people to defraud the system by claiming to have disabilities they don't, persons with a disability and their families greatly need this kind of vehicle to keep the federal government from plundering their much needed care dollars.  Frankly, I wish every American could make use of such accounts to cover all of their healthcare needs.  But this is a great start to opening up a window of liberty in a much needed area. 

In summary:   

• The accounts will be funded with post-tax dollars but the earnings in the account and disbursements will not be taxed; similar to a ROTH IRA
• Accounts can accrue up to $100,000.  I'd like to see no limit or at least $1 million.
• Up to $14,000 may be deposited per year
• Disabled means "marked and severe functional limitations" and one must be diagnosed by the age of 26
• Up to 54 million disabled persons and their families may benefit

This is from Hope Yen writing for the Associated Press, published at Twin Cities.com: 

Congress gave final approval Tuesday to the most sweeping legislation to help the disabled in a quarter century, allowing Americans with disabilities to open tax-free bank accounts to pay for needs such as education, housing and health care.

The move paves the way for creation of the accounts beginning next year for as many as 54 million disabled people and their families.

"This is a monumental, landmark bill," said Sara Hart Weir, interim president of the National Down Syndrome Society. "This bill will change the way that families can save for all their children and adults with Down syndrome and will ease the unnecessary burdens that are placed on families — all while allowing people with Down syndrome to work and save for the future."

The ... Senate passed the measure on a 76-16 vote after it was attached to a bill extending dozens of tax breaks for individuals and businesses until the end of the year. Earlier this month, the ... House overwhelmingly approved the measure, having garnered 85 percent of Congress as co-sponsors.

The bill, called the Achieving a Better Life Experience Act, now goes to President Barack Obama for his signature.

Modeled after tax-free college savings accounts, the ABLE bill would amend the federal tax code to allow states to establish the program.

To qualify, a person would have to be diagnosed by age 26 with a disability that results in "marked and severe functional limitations"; those who are already receiving Social Security disability benefits would also qualify. Families would be able to set up tax-free accounts at financial institutions, depositing up to $14,000 annually to pay for long-term needs such as education, transportation and health care.

The contributions would be in after-tax dollars but earnings would grow tax-free.

The ABLE accounts would be able to accrue up to $100,000 in savings without the person losing eligibility for government aid such as Social Security; currently, the asset limit is $2,000. Medicaid coverage would continue no matter how much money is deposited in the accounts. ...

The measure was sponsored by Sens. Bob Casey, D-Pa., and Richard Burr, R-N.C. ...

   

Crippling Costs Crush Single Payer Healthcare in Vermont Before It Begins

The tax rates required for Vermont to provide single-payer coverage were going to be truly staggering. The lesson is simple: when governments involve themselves in the provision of healthcare, utterly confiscatory tax rates necessarily follow.

This is from Jerry Geisel at Business Insurance:

Vermont is abandoning efforts to move to a publicly financed health care system to ensure universal coverage, Gov. Peter Shumlin [a Democrat] said Wednesday. ...

Vermont officials had been considering such an approach since 2011 when state lawmakers passed legislation calling for the Green Mountain State to move to a health care system that would “ensure universal access to and coverage for high-quality, medically necessary services for all Vermonters.” 

The law, though, was short on details. It was left to a five-member board to make decisions on issues such as premium subsidies; benefits that would have to be covered; the role, if any, of employers and insurers; and, above all, financing. 

But it turned out that the cost of a publicly financed health care system was, as Gov. Shumlin put it, “enormous” and would require an “11.5% payroll tax on all Vermont businesses and a public premium assessment of up to 9.5% of individual Vermonters’ income. These are tax rates that I cannot responsibly support,” he said. ...

The emphasis added is mine.
 

 

Report: National Trends in the Cost of Employer Health Insurance Coverage, 2003–2013 | Highlights from Commonwealth Fund Study

• Premiums for family coverage increased 73 percent over the past decade. 

• Median family income has risen by 16 percent over the same time period.  

• Employees’ contributions to their premiums climbed by 93 percent over that time frame. From $606 in 2003 to $1,170 in 2013. 

• Deductibles more than doubled from $518 in 2003 to $1,273 by 2013. 

• About 57% of the under-65 population—or more than 150 million people—have insurance through employers. 

  

Source: National Trends in the Cost of Employer Health Insurance Coverage, 2003–2013 | The Commonwealth Fund.

Stories Causing Atlas to Shrug, Dec 17th Edition | Calif Propaganda Rap Vids; The Obesity Epidemic and Food Stamps; Fed vs. Private Citizen Pay and More

Federal spending savvy: it costs 1.7 cents to make a penny and 8 to make a nickel. Sounds about right.


Making Everyone a Criminal: The Obamacare & Atlas Shrugged similarity - once you're made into a "criminal" you become far more compliant.


The removal of work requirements increases food stamp use by 50% even while unemployment is roughly halved over the same period.

• In America, the long term unemployed actually get fatter. 
• 2/3 of children in America are living in homes on federal aid programs. 

Total compensation (wages plus benefits) for federal, civilian employees was $115,524 in 2013, as opposed to $66,357 in the private sector.


Obamacare results in a historic jump in part time work and will cause $1 trillion in lost economic output by 2023.


Employees Can Use Work E-mail Systems for Union Business. The National Labor Relations Board has ruled that employees’ use of e-mail for organizing purposes on nonworking time must be permitted. This overruled a 2007 decision that held that employees can have no statutory right to use their employer’s email systems for union purposes.


Slurpees, Hot Dogs, Lotto Tickets and Obamacare: Obamacare ads will now appear on 7-Eleven receipts at more than 7,000 stores nationwide as government officials expand taxpayer funded advertising of how to get taxpayer funded healthcare.


The video, California: We Do Things Different, features California State Superintendent of Public Instruction Tom Torlakson rapping state-sponsored propaganda. Yep, this how we spend your tax dollars.  It's a good thing the state and federal government have such a massive surplus:

Obamacare cartoon of the week: 

And in the spirit of the season:

  

Paying Down the U.S. Debt is Now Basically an Impossibility | Mathematical Model & Options

This is part of a sobering post and video from Zero Hedge: 

A mathematical model ... shows that, even with absurd assumptions (7%+ GDP growth for years at a time, low interest rates, etc.), it is simply not feasible for the US government to ‘grow’ its way out [of the current debt].  

Default has become the only option. And that could mean a number of things.

• They could default on their creditors (other governments like China who loaned money to the US government). But this would spark a global financial and banking crisis. 

• They could default on the Federal Reserve, which owns trillions of dollars of US debt. But this would create an epic currency crisis for the US dollar.

• They could also default on their obligations to their citizens—primarily to future beneficiaries of Social Security (who collectively own trillions of dollars of US debt).

• Or they could choose to default on their obligations to every human being alive who holds US dollars… and engineer rampant inflation.

None of these is a good option. And simply put, the US government has reached a point of no return. ...

  

  

California Employers Must Take Action by January 1, 2015 to Comply with the New July 1, 2015 Paid Sick Leave Law

This is an excerpt from Tamara Devitt and Kim Chase at Haynes Boone:

Required Notice, Posting, and Record Keeping

The law includes various other requirements in terms of notice, posting, and record keeping. For example, employers must keep records documenting the hours worked and paid sick days accrued and used by each employee for at least three years and provide accrual information on paystubs. Additionally, effective January 1, the new law requires that Wage Theft Prevention Act notices, which must be provided to hourly employees at the time of hiring, include a description of the paid sick leave law. The new law also requires employers to display posters regarding the new law in each workplace beginning on January 1. ... 

Liability 

The law calls on the Labor Commissioner for enforcement. Although it does not expressly create a private cause of action for employees, violations of the new law might be used to support a claim for wrongful termination or retaliation. Relief available for violations includes reinstatement, backpay, payment of withheld sick time, and penalties of up to $4,000. 

Next Steps for Employers 

In light of the foregoing, by January 1, 2015, employers with employees who work 30 days or more per year in California need to: 

(1) evaluate whether to adopt the Labor Commissioner’s template poster — available here — or create a separate poster;

(2) display the poster in a conspicuous place in each workplace by January 1, 2015; and 

(3) update their new hire paperwork for hourly non-exempt employees to include the revised Section 2810.5 form — available here — by January 1, 2015. 

Additionally, prior to July 1, 2015, those same employers need to take several steps to ensure their materials and policies are up to date: 

(4) either draft a separate paid sick leave policy, or review and revise their existing paid time off or paid leave policy, to comply with the law’s requirements on probationary periods, accrual, carry over, and use; 

(5) update their payroll systems; and 

(6) update their record-keeping systems.

The California Labor Commissioner recently published a FAQ’s page to clarify certain provisions of the new law. See here.

 

Internal Revenue Code § 105(h) Nondiscrimination Rules under PPACA | Regulations Still on Hold - Update

This is an excerpt from a post done by Michael Arnold of Mintz Levin: 

[PPACA] added Public Health Service Act § 2716, the provisions of which are incorporated into the Internal Revenue Code and ERISA. Enforcement of these new group health plan non-discrimination rules has been delayed indefinitely, however, by IRS Notice 2011-1.... 

In 1978, when Congress first turned its attention to group health plan non-discrimination, it was of the (subsequently discredited) view that carrier underwriting rules would be sufficient to curb discriminatory plan designs in the case of fully-insured arrangements. Congress had a change of heart, and in the Tax Reform Act of 1986 added the now infamous “Code § 89,” which established a mind-numbingly complex set of nondiscrimination rules that applied to a broad range of welfare and fringe benefit plans, including employer-provided group health plans. Proposed regulations issued in 1989 were the subject of intense criticism. Despite some delays in the effective dates, and in spite of an earnest attempt at simplification, intense lobbying pressure (particularly by small business interests) ultimately doomed the measure. Code § 89 was repealed in 1992 (retroactive to 1989). In the process of writing rules under the ACA, the regulators are no doubt mindful of the frosty reception given the 1989 proposed rules. 

For a comprehensive discussion of the issues that confront the regulators as they craft non-discrimination rules under Public Health Service Act § 2716, please see the August 3, 2012 comment letter submitted by the American Bar Association Tax Section and a separate outline on the subject prepared by Helen Morrison, Ernst & Young LLP and Linda Mendel, Vorys, Sater, Seymour and Pease LLP. 

Self-funded Group Health Plans 

Self-funded group health plans are a different matter. Since 1978, Code § 105(h) has imposed rules governing discrimination on the basis of eligibility or benefits. Failure to follow these rules results in the taxation of “excess benefits” in the hands of highly compensated participants. (For a summary of the Code § 105(h) non-discrimination rules, click here.) But an understanding of these rules, no matter how thorough, comprehensive, or accurate, obscures the practical reality: the rules are rarely followed or enforced. And where employers do attempt to follow them, the compliance testing methods adopted by one employer are unrecognizable to another employer following the same rules! This too is likely to change once the regulators turn their attention to group health plan non-discrimination issues generally. 

 

How the Healthcare Reform 'Bailouts' Work and How Some Insurers are Farming Them | With Audio from Armstrong & Getty

Three mechanisms were built into the Patient Protection and Affordable Care Act ("PPACA" or "Obamacare") to entice insurers to participate in the PPACA Exchanges and to ensure them that their losses are partially covered by other profitable insurers, policyholders and taxpayers, for a transitional three-year period.  This system of transfers to insurers is referred to as the "Three Rs" program or simply as "bailouts."  

The Three Rs were designed to assuage insurer fears that too few people might sign up for Obamacare or that those who do sign up will be sicker and older than the general population. In that case, insurers would be stuck with more bills from health care providers than they had premiums with which to pay.  To socialize the risk of loss between our government and insurance companies a system of reinsurance, risk adjustment and risk corridors was born.

The Three Rs

Reinsurance: The PPACA reinsurance program is paid for by a $63 tax on all health plans. That money is paid to any health insurer spending more than $45,000 on any one Obamacare patient in any single year.  That was a change occurring just prior to Thanksgiving. $60,000 to $70,000 had been the planned attachment point.  The tax applies to all health care plans, but the benefits only go to PPACA plans.  Hence the reinsurance program is skillfully crafted to transfer taxpayer dollars primarily from those who buy insurance to those who have their insurance purchased for them. (In California's Exchange, for example, 90% of purchasers are subsidized with taxpayer dollars.) The whole scheme sounds very Grubesque doesn't it?

Risk Adjustment: The risk adjustment program intends to dissuade insurers from marketing or pricing their plans in such a way that they disproportionately attract healthy, and therefore lower-cost, patients.  It seeks to achieve this by assessing the patient population of each insurer and then determining which insurers are covering healthier people and which are covering sicker people. The plans covering the better-risk population are then compelled to pay money to the plans covering sicker people. All transfers between insurance companies are then supposed to even out.

Risk Corridors: The risk corridor program is intended to encourage insurers to price their premiums accurately by protecting them from losses if their patients turn out to require more care than anticipated or taking money from them if the opposite occurs. The program uses a formula to take money from those insurers that do not spend a lot of money paying for patient health care, and then gives that money to other insurers that do spend a lot of money on patient care.  You can think of this as the "Robin Hood 'R'" of PPACA's bailouts.

The big difference between the Three Rs is that the first two Rs (the reinsurance and risk adjustment programs) either have a delineated flow of revenue support (the $63 tax on all health plans) or the payouts are to be limited to what the program takes in (all transfers are slated to balance out in the risk adjustment program - at least for now).

The risk corridor program, however, has no set source of revenue. This means that if more insurers underprice their Obamacare plans in an effort to gain market share than plans who over-price, there will be a PPACA shortfall on this third R.  Where would that money come from?

When the Congressional Budget Office originally scored PPACA, they assumed that all Three Rs would even out and cost the taxpayers no more than the $63 fee per policy holder.  In a subsequent 2014 reevaluation, the CBO myopically concluded that the risk corridor program would actually save taxpayers $8 billion over the next 10 years.  Sound too good to be true?

It was. In June it began to look like we would not save $8 billion, in fact, the opposite started to look like reality. And insurers, once again, needed reassurance.  CMS then told us that the government would go ahead and levy a new fee to cover any shortfall.  This is from Scott Gottlieb, writing at Forbes on June 20, 2014:

Mandy Cohen, the Acting Administrator of the Centers for Medicare and Medicare Service’s Center for Consumer Information and Insurance Oversight, delivered that message yesterday. Cohen was testifying before the House Subcommittee on Economic Growth, Job Creation and Regulatory Affairs. 

She said that if funding for the risk corridors can’t be financed off the money that gets clawed away from profitable insurers (therefore allowing the entire scheme to remain budget neutral) then CMS has the authority, if not the intention to impose additional “user fees” on all health insurers to cover the higher losses experienced by the Obamacare plans. 

See the entire video here – the specific discussion on the user fees starts at 19:40 (and runs for about 8 minutes).  

  

---

"It is important to remember that government interference always means either violent action or the threat of such action. The funds that a government spends for whatever purposes are levied by taxation. And taxes are paid because the taxpayers are afraid of offering resistance to the tax gatherers. They know that any disobedience or resistance is hopeless. As long as this is the state of affairs, the government is able to collect the money that it wants to spend. Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom." Ludwig Von Mises

---

Insurer Cherry Picking Begins

Like every business, insurers simply respond to the profit motive and regulatory environment in front of them.  Insurers are making use of the heavy taxpayer subsidies for premium along with the above described Three Rs Program to generate as many paying customers as physically possible over the Three Rs planned 3-year duration.  Now that we know the government plans to bail out all insurers under the risk-corridor program, even if every single one underbids its premium, the sky is the limit for insurers to gobble up as much market share as possible with virtually no downside.

Not all insurers are using the same strategy; they need not worry about being exactly correct in their means because in the end they have the might of the federal government and its power to tax behind them.  Below, I've set forth a smattering of some of the different methods carriers are using or will use to maximize profit and governmental assistance.

Rock Bottom Bronze Pricing: A carrier could subtly manipulate its pricing to encourage consumers to purchase Bronze plans (the lowest premium/highest deductible plans in the Exchanges) and discourage sales at metal levels with richer benefit levels that are less likely to attract healthy, lower cost, consumers.  This would naturally allure more healthy purchasers to your rolls.

Sky High Platinum Pricing: In reviewing carrier pricing proposals in year-two of the exchanges you can clearly see some carriers propose raising health insurance rates well into the double digits for all metals except the Bronzes, for which rates will dramatically decrease.

An insurer might be inclined to manipulate its prices in this manner for a variety of reasons:

(1) it moderates how the average rate increase appears on paper helping in public relations and making their government-partners happy;

(2) it encourages consumers to switch from richer benefit metal levels that are riskier for the insurer to those that are less risky (like the Bronze plans where consumers pay more of their claims via deductibles as high as $13,200 per family);

(3) it attracts healthier customers who prefer lower premiums and high deductibles for themselves.

This pricing strategy benefits the carrier while manipulating consumers and skirting the purported premise of PPACA: that carriers must take consumers as they come and may not underwrite for those who are healthier and less risky.

Let's Put Butts in Seats, They Won't Rush Out: This rate increase for non-Bronze plans may be to correct underpricing issues from 2014, raising another concern: a carrier may have strategically priced their plan low in 2014 to attract customers, knowing that it would have to raise its rates in 2015 to bring itself back up to reasonable prices.  People hate to change health insurers and insurers know that very well.  After attracting consumers to their plan, a carrier knows that most enrollees will opt to stay with their current carrier rather than go through enrollment again. In fact, in Obamacare, insurers can rely on auto-enrollment to secure consumers even after that insurer is no longer the best financial alternative.

This reminds me of a particularly unscrupulous brokerage owner I ran across in my work. His office was staffed with a massive array of sales folks and virtually no service personnel. They cold called, networked, pushed and prodded so hard it made used car salesmen blush. And they always had an abundance of clients.  But they never kept those clients.

He told one of my colleagues one day, after a few cocktails at a social gathering, "you don't need to service them.  Just sell 'em!  Clients hate the broker change process so much that once you get a new one you almost always keep it for 3 years; even when you do the absolute bare minimum for them."

In fact, I've had one carrier tell me the same story.  While the Three Rs are in place they just want headcount.  They'd prefer healthy headcount but they ultimately don't care because they know Three R dollars will be funneled to them if they lose money in these first three years.  "What about at the end of three years?" I asked.

"If, at the end of three years, the Three Rs go away, we'll raise premiums accordingly to cover any possible losses," he told me.  But it was also made clear to me, from this industry insider that they did not think PPACA could survive without the Three R Bailouts. And thus, we have the birth of a socialized government-insurer complex.

My Interview with Armstrong and Getty

The day after I posted this column, I went on the Armstrong and Getty Radio Program to give my thoughts on Tuesday's Jonathan Gruber congressional hearings as well as this article.  The discussion of this post begins at 5:20 in the below audio excerpt.

---

Sources and Background:

1. State Health Reform Assistance Network, April 2012 Research Brief.  
2. Why Obamacare Is Like Three Mile Island, by Megan McArdle at Bloomberg, October 23, 2013.  
3. Medicare Official: Obamacare "Bailout" Of Insurers To Be Financed By New Tax, by Scott Gottlieb at Forbes, June 20, 2014. 
4. How The Obama Administration Lied About Insurance Company Bailouts, by  Dan McLaughlin at the Federalist, August 6, 2014. 
5. Obamacare's Illegal Insurance Company Bailout, by Conn Carroll at Townhall, October 01, 2014. 
6. Government Watchdogs Agree: Obamacare’s Insurer Bailouts Aren’t Authorized. The Administration Plans to Make Payments Anyway, by Peter Suderman, October 7, 2014.   

Media Cheers 5.8% Rate and Addition of 321,000 Jobs But Unemployment is Up 115,000

Yes, this is a move in the right direction, but we still have a long way to go.  Behind the headlines are some very troubling numbers.

• There are only 4,000 more working Americans. 
• At the same time, there are another 115,000 in the unemployment line. 
• That disparity is because of an expanding labor force, which grew 119,000.  
• The participation rate measures the percentage of the adult civilian population who held a job during the month or simply sought one.  
• It remained at 62.8%. 
• That is a 36 year low.  
• In California it is only 62.3%. 
• Full-time jobs declined by 150,000, while part-time positions increased by 77,000.
• U-6 Unemployment is at 11.4%.  This is a more realistic representation of unemployment as it also includes 
• all the people who want a job but gave up, 
• all the people involuntarily stuck with part-time jobs, and 
• the people who dropped off the unemployment tally because their unemployment benefits expired. 
• Meanwhile, many who've stopped looking for work are relying on government disability benefits.  From 2000 to 2012, the number of Americans filing disability claims soared 80% to 9 million from 5 million — a much faster rate than the previous decade. 

Sources: CNBC, CNSNews, NY Times, Mish's Global Economic Trend Analysis, LA Times, and the Social Security Administration.

The Best and Worst Run States in America | Ranking of All 50

Annually, 24/7 Wall St. (a USA Today content partner offering financial news and commentary) ranks each state's operation and efficiency.  To determine how well states are managed they compile key financial ratios as well as social and economic outcomes such as:

• Debt per capita;
• Credit Rating; 
• State unemployment rate; 
• Median household income; and 
• Poverty rate. 

The study notes that, "the worst-run states ... tend[] to have weak fiscal management, reflected by low pension funding, sparsely padded coffers, and poor credit ratings from Moody’s Investors Service and Standard & Poor’s (S&P). Illinois, the worst-run state in America, received lower ratings than any other state from both agencies. By contrast, the majority of the 10 best-run states had perfect ratings from both agencies."  

Additionally, unemployment is low in the nation’s best-run states. "North Dakota, the top-ranked state, had an unemployment rate of 2.9% last year, the best in the U.S. In all, eight of the 10 best-run states were among the 10 states with the lowest unemployment rates." 

Top Ten States:  

          

North Dakota

1. North Dakota

> Debt per capita: $2,880 (19th lowest)

> Credit Rating (S&P/Moody’s): AAA/Aa1

> 2013 unemployment rate: 2.9% (the lowest)

> Median household income: $55,759 (19th highest)

> Poverty rate: 11.8% (10th lowest)

Wyoming

  2. Wyoming   
  > Debt per capita: $2,269 (12th lowest)

  > Credit Rating (S&P/Moody’s): AAA/NGO

  > 2013 unemployment rate: 4.6% (6th lowest)

  > Median household income: $58,752 (13th highest)

  > Poverty rate: 10.9% (6th lowest)

3. Nebraska

> Debt per capita: $1,110 (2nd lowest)

> Credit Rating (S&P/Moody’s): AAA/NGO

> 2013 unemployment rate: 3.9% (3rd lowest)

> Median household income: $51,440 (25th highest)

> Poverty rate: 13.2% (17th lowest)

4. Iowa

> Debt per capita: $1,995 (10th lowest)

> Credit Rating (S&P/Moody’s): AAA/Aaa

> 2013 unemployment rate: 4.6% (6th lowest)

> Median household income: $52,229 (21st highest)

> Poverty rate: 12.7% (14th lowest)

5. Minnesota

> Debt per capita: $2,441 (16th lowest)

> Credit Rating (S&P/Moody’s): AA+/Aa1

> 2013 unemployment rate: 5.1% (9th lowest)

> Median household income: $60,702 (9th highest)

> Poverty rate: 11.2% (7th lowest)

6. Utah

> Debt per capita: $2,436 (15th lowest)

> Credit Rating (S&P/Moody’s): AAA/Aaa

> 2013 unemployment rate: 4.4% (4th lowest)

> Median household income: $59,770 (11th highest)

> Poverty rate: 12.7% (14th lowest)

7. Alaska

> Debt per capita: $8,039 (4th highest)

> Credit Rating (S&P/Moody’s): AAA/Aaa

> 2013 unemployment rate: 6.5% (18th lowest)

> Median household income: $72,237 (2nd highest)

> Poverty rate: 9.3% (2nd lowest)

8. Texas

> Debt per capita: $1,725 (6th lowest)

> Credit Rating (S&P/Moody’s): AAA/Aaa

> 2013 unemployment rate: 6.3% (17th lowest)

> Median household income: $51,704 (23rd highest)

> Poverty rate: 17.5% (13th highest)

9. Vermont

> Debt per capita: $5,411 (10th highest)

> Credit Rating (S&P/Moody’s): AA+/Aaa

> 2013 unemployment rate: 4.4% (4th lowest)

> Median household income: $52,578 (20th highest)

> Poverty rate: 12.3% (12th lowest)

10. South Dakota

> Debt per capita: $4,270 (13th highest)

> Credit Rating (S&P/Moody’s): AA+/NGO

> 2013 unemployment rate: 3.8% (2nd lowest)

> Median household income: $48,947 (22nd lowest)

> Poverty rate: 14.2% (23rd lowest)

The Bottom Five: 

46. Kentucky

> Debt per capita: $3,436 (23rd highest)

> Credit Rating (S&P/Moody’s): AA-/Aa2

> 2013 unemployment rate: 8.3% (7th highest)

> Median household income: $43,399 (5th lowest)

> Poverty rate: 18.8% (6th highest)

47. Rhode Island

> Debt per capita: $8,761 (3rd highest)

> Credit Rating (S&P/Moody’s): AA/Aa2

> 2013 unemployment rate: 9.5% (2nd highest)

> Median household income: $55,902 (18th highest)

> Poverty rate: 14.3% (24th lowest)

48. Mississippi

> Debt per capita: $2,405 (14th lowest)

> Credit Rating (S&P/Moody’s): AA/Aa2

> 2013 unemployment rate: 8.6% (6th highest)

> Median household income: $37,963 (the lowest)

> Poverty rate: 24.0% (the highest)

49. New Mexico

> Debt per capita: $3,621 (20th highest)

> Credit Rating (S&P/Moody’s): AA+/Aaa

> 2013 unemployment rate: 6.9% (24th highest)

> Median household income: $43,872 (6th lowest)

> Poverty rate: 21.9% (2nd highest)

                

50. Illinois

> Debt per capita: $4,992 (11th highest)

> Credit Rating (S&P/Moody’s): A-/A3

> 2013 unemployment rate: 9.2% (3rd highest)

> Median household income: $56,210 (17th highest)

> Poverty rate: 14.7% (25th lowest)

Select Western States with Comments: 

15. Washington

> Debt per capita: $4,173 (15th highest)

> Credit Rating (S&P/Moody’s): AA+/Aa1

> 2013 unemployment rate: 7.0% (23rd highest)

> Median household income: $58,405 (14th highest)

> Poverty rate: 14.1% (22nd lowest)

This is probably close to the right spot for Washington.  It might be a tiny bit overrated based on the authors' fascination with Washington's progressively high minimum wage laws.  Many economists would view that as a pitfall rather than a bolstering quality.  But all in all, I think 15th is about right.

16. Idaho

> Debt per capita: $2,447 (17th lowest)

> Credit Rating (S&P/Moody’s): AA+/Aa1

> 2013 unemployment rate: 6.2% (15th lowest)

> Median household income: $46,783 (13th lowest)

> Poverty rate: 15.6% (25th highest)

I also agree with this ranking.  If I were going to move Idaho I'd slide it up a few spots and maybe slide Washington down a couple.  Idaho also has one of the nation's lowest rates of violate crime at 217 incidents per 100,000 people and, according to the study, "the state’s college-attainment rate grew more than in the vast majority of states between 2009 and last year."  Idaho is trending in the right direction.

20. Oregon

> Debt per capita: $3,507 (22nd highest)

> Credit Rating (S&P/Moody’s): AA+/Aa1

> 2013 unemployment rate: 7.7% (15th highest)

> Median household income: $50,251 (23rd lowest)

> Poverty rate: 16.7% (18th highest)

Oregon appears to be slightly overrated in this ranking.  Nearly 20 percent of Oregon residents was on food stamps last year.  That is the highest figure nationwide.  I would have expected Oregon to be in the high 20s to low 30s.  

30. California

> Debt per capita: $3,987 (17th highest)

> Credit rating (S&P/Moody’s): A/Aa3

> Unemployment rate: 8.9% (4th highest)

> Median household income: $60,190 (10th highest)

> Pct below poverty line: 16.8% (17th highest)

I'm not sure how California pulled off this high of a ranking. It should almost certainly be in the bottom 15 of not the bottom 7 states. Certainly its high median income buoys it, but the cost of living in California is among the highest in the nation so that pure income calculation can be misleading.

Image not from study.  Originally published in UT San Diego.

38. Nevada

Reno, Nevada with Mt. Rose in background

> Debt per capita: $1,397 (5th lowest)

> Credit Rating (S&P/Moody’s): AA/Aa2

> 2013 unemployment rate: 9.8% (the highest)

> Median household income: $51,230 (25th lowest)

> Poverty rate: 15.8% (24th highest)

Nevada's unemployment is what weighs it down.  It's outstanding debt ratio, modest poverty rate and a relatively high median income (the cost of living in Nevada is much lower than in California, Oregon or Washington) should probably have this state in the top 20.  It would certainly be in the top 10 to 15 for retirees, for whom unemployment is much less of a concern.  

45. Arizona

> Debt per capita: $2,140 (11th lowest)

> Credit Rating (S&P/Moody’s): AA-/Aa3

> 2013 unemployment rate: 8.0% (12th highest)

> Median household income: $48,510 (21st lowest)

> Poverty rate: 18.6% (9th highest)

Frankly, this state's relatively low debt per capita rating, recent upgrade in credit rating and middle-of-the pack ranking for median income make me think that Arizona should be rated quite a bit higher than this - at least in the top 25 or 30.

Link to full study here.
Link to USA Today article about the study here.
  

Wellness Programs Don't Save Money

If there are any "savings" for an employer to gain from wellness, it is in the form of cost-shifting more premium or claims (penalties) onto sicker employees. But insofar as that is what is really being done, the EEOC has recently demonstrated as described below, they are eager to administer legal discipline.  Be careful in falling for the wellness ruse, it could backfire on you.  

This is from Austin Frankt over at the Incidental Economist:

We’ve said it before, many times and in many ways: workplace wellness programs don’t save money. 

Last week, on the Health Affairs blog, Al Lewis, Vik Khanna, and Shana Montrose said so too, adding some nuance we have not included in our [prior posts]. ...

Here is an excerpt from Lewis, Khanna and Montrose's work:

In sum, with tens of millions of employees subjected to these unpopular and expensive programs, it is time to reconfigure workplace wellness. Because today’s conventional programs fail to pay for themselves and confer no proven net health benefit (and may on balance adversely affect health through over-diagnosis and promotion of unhealthy eating patterns), conventional wellness programs may fail the Americans with Disabilities Act’s “business necessity” standard if the financial forfeiture for non-participants is deemed coercive, as is alleged in employee lawsuits, against three companies, including Honeywell. 

 

In Response to Complaints over the Ultra-Narrow Networks Spawned by Obamacare, New Rules Proposed

The National Association of Insurance Commissioners (NAIC) has released draft regulations regarding the adequacy of health plan provider networks including in the Exchanges set up under PPACA.  The new draft model act can be found here.

According to Employee Benefit News:

... CMS has stated it will revise its own network adequacy laws based on what the NAIC recommends.... 

“Accordingly, it is important for any insurer that utilizes provider networks and for the provider networks themselves to understand how these provisions may impact them.” 

The draft model law includes several changes to the existing NAIC model, most notably the use of the term “managed care plan” has been replaced by “network plan.” 

NAIC says in the draft that the term “is intentionally broad in order to apply to health benefit plans using any type of requirement or incentive for enrollees to choose certain providers over others, such as HMOs, EPOs, PPOs and including accountable care organizations (ACOs) and other models of health care delivery systems.” 

Some states may wish to limit the definition by regulation to exclude plans having broad-based provider networks that meet specified standards, the draft adds.  

While the model law has always required issuers to ensure and maintain adequate patient access to providers, the draft model law now includes a requirement for health plan issuers to submit access plans to state regulators. 

States are given the option to require approval of the access plan by the insurance commissioner, or simply require the access plan be filed with the state.

The draft model law also includes new criteria to be used in determining the sufficiency of a provider network, including geographic population dispersion and new health care options such as telehealth and telemedicine. Under the draft model law, network plans are also required to maintain an online provider directory and update it at least monthly. 

Print copies of provider directories must be available upon request, as well as accessible versions of the directories for individuals with disabilities or limited English language proficiency. 

The NAIC is accepting comments until Jan. 12, 2015, on the draft model law. 

 

Economic Freedom in North America | Yes, California is in the Worst Quintile

The Fraser Institute just released their annual study:

In the United States, the most free states were Texas and South Dakota, both at 7.8, followed by North Dakota at 7.7 and Virginia at 7.5. (Note that since the indexes were calculated separately for each country, the numeric scores are not directly comparable across countries.) The least free state was Maine at 5.2, followed by Vermont and Mississippi, both at 5.3. New York was next, ranked 47th with 5.5. 

California tipped the scales at 43rd.  Frankly, seventh from worst is much better than I'd have suspected based on similar, comparable rankings. Generally speaking, California rates in the bottom three in all employment and business rankings while it does to a smidgen better in the analyses that weigh more heavily on personal freedoms.

This in an excerpt from a summary from the National Center for Policy Analysis:  

What does economic freedom translate into? Higher incomes for state residents. As Stansel wrote in the Washington Examiner, Texas, South Dakota and North Dakota had average incomes 20 percent higher than Maine, Vermont and Mississippi. Similarly, the top 10 most free states saw a 3.5 percent growth in employment and 8 percent economic growth, while the 10 least free states saw hardly any employment growth and only 2 percent economic growth.

The full set of studies (including both the US and North American versions) can be found at the Fraser Institute. 

  

Interestingly, when analyzing all of North America, the top three jurisdictions (and four of the top five) are Canadian, with Alberta at 8.2 in first place and Saskatchewan at 8.0 in second. Newfoundland & Labrador, Texas, and British Columbia are tied for third with 7.7. The 18 lowest-ranked jurisdictions are all states in Mexico.  Sadly, economic freedom has been on the decline in each of the United States, Mexico and Canada since 2000.  Canada's economic freedom has declined the least of all three countries while the U.S. has declined the most.  

Also from the study (at page 9 of the linked PDF):  

What is economic freedom and how is it measured in this index?
Writing in Economic Freedom of the World, 1975–1995, James Gwartney, Robert Lawson, and Walter Block defined economic freedom in the following way.

Individuals have economic freedom when (a) property they acquire without the use of force, fraud, or theft is protected from physical invasions by others and (b) they are free to use, exchange, or give their property as long as their actions do not violate the identical rights of others. Thus, an index of economic freedom should measure the extent to which rightly acquired property is protected and individuals are engaged in voluntary transactions. (Gwartney, Lawson, and Block, 1996: 12) 

The freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions such as what is to be produced, how it is to be produced, how much is produced, and for whom production is intended. As government imposes restrictions on these choices, there is less economic freedom.  

Methodology

The researchers looked at six different "areas" of freedom, including governmental size, regulatory takings and discriminatory taxation, overall regulation, the legal system and property rights, monetary policy, and freedom of trade.  Each area is composed of many sub-categories.  Each of these categories of freedom was then scored on a scale of 0-10 with 10 being the most free and different weights applied to the appropriate category. For example, the weight for Area 1 (size of government) was 33.3%. Area 1 has three sub-categories, each of which received equal weight in calculating size of government, or 11.1% in calculating the overall index. Their entire method and all data sets can be found here (on pages 9 to 16 and page 65 in the linked PDF).
  

Stories Causing Atlas to Shrug, Dec. 2nd Edition | PPACA's Low Premium - High Deductible Ruse; Gov. Working Hard to Break Down Pride; Econ 101; & Federal Acts on Sunscreen

Obamacare plans Gruber you in with low premiums and monster deductibles that make the plans virtually "worthless" to most people.  Then they call it "affordable."

Big Government and insurers are working together to break down the inherent, self-reliant nature of Hispanic culture "between the avocado and grapefruit displays" (as Yahoo Finance puts it.)  I bet you are pretty happy your tax dollars are going toward that effort.

There are 317 million Americans.  Only 4 million will pay Obamacare's individual mandate. That's a whopping 1.26%.  There are now more than 25 exemptions to it; some of which rely on the honor system. Kill it, already. (Here and here for all of exemptions.)

HEADLINE: Government mandated corporate welfare makes corporations bigger. The Hill tosses out an Onion-esque story.

Lower income and part-time workers will churn between Medicaid and Obamacare Exchanges, two times a year or more, depending on changes in income.  That's not going to help health reform approval numbers.

Because the Federal Government is not big enough, the DNC and GOP got together to pass the Sunscreen Innovation Act to "help ensure Americans have access to the best quality sunscreen." Outstanding: I'm going to add that to my thankful list at the dinner table for 2015's Turkey Day.


The two largest carriers in California's Obamacare Exchange only have about 50% of their normal doctor list available for new patients.

Yet another Obamacare change to avoid having to tell the public the PPACA savings just are not happening: "According to CMS, just 25% of MSSP ACOs launched in 2012 and 2013 have generated sufficient savings to earn bonuses." (Hat tip: Dr. Ryan Kennedy.)

Armstrong and Getty covered couple of these stories and more on December 3rd:

  

Canadian Provinces Becoming More Tax Friendly Than U.S. States

Americans For Tax Reform (ATR) and the Canadian Taxpayers Federation (CTF) jointly released a very intriguing study showing that of the 123 unrestricted free agents who changed teams during the 2014 off-season, 57% of went to teams with lower taxes.  While this is a study of National Hockey League (NHL) players, the ramifications for corporate HR executives recruiting efforts are similar.  Your jurisdiction makes a difference when seeking top talent. High tax jurisdictions, like California have to pay a higher price for their largess. 

The study, titled Home Ice Tax Disadvantage compares team salaries, personal income tax rates in the relevant locale, and the "true" salary cap, which takes into consideration these rates. The report shows the impact that taxes – personal income taxes in particular – have on labor mobility.

"Interestingly, Alberta’s combined federal and provincial taxes are now lower than the states that have no state income taxes. Of the 23 American teams, 21 of them fell in the rankings of best places to play between 2012 and 2014. Florida, Tampa Bay, Dallas, and Nashville fell from the top spot in 2012 to third best locations in 2014 to play from an income tax standpoint," the study provides.

Coming as no surprise to Californians, Los Angeles Kings players paid the highest total of $27.8 million to the federal government and $8.5 million to the state.  The study also shows that, "[h]aving a no trade clause gives the power to avoid being sent to high tax jurisdictions. Jason Spezza’s tax savings by moving from Ottawa to Dallas are $394,732."

“NHL players are just one example of highly skilled workers who have a choice of where to work” added CTF Federal Director Aaron Wudrick. “The same principles apply far beyond professional athletes, but also for doctors, engineers and CEOs of major companies. If high tax rates make it more difficult to attract free-agents in the NHL, it’s not a stretch to believe it’s also be hard to attract other highly skilled workers. Governments need to keep that in mind when they’re considering the impact of tax rates on attracting top talent.”

The CTF and ATR study on the taxes of NHL players can be found Here. Below are some highlights from the study.  Click on an image to see a larger size version. 

   Free Agent Savings: