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Wonkbook: Stimulus reax; Mitch Daniels' plan; Obamas opposes tax cut extension

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Are we calling the proposed raft of tax breaks and infrastructure investments stimulus? Jobs bills? Economic reforms? Either way, Mark Zandi, the Moody's economist who has emerged as the arbiter of stimulus spending, is unimpressed. "Helpful on the margin," he says, "but they're not a gamechanger." But Mitch Daniels, the Indiana governor who has emerged as the standard-bearer for serious conservatism, has released a six-part stimulus plan that shares features with Obama's proposal and adds the payroll-tax holiday that Obama considered but ultimately dropped. What happens if the Obama administration reverses course and decides to agree with him?

In other news, the Obama administration has broken with its former budget director, Peter Orszag, and reiterated its opposition to extending the Bush tax cuts for filers earning over $250,000 a year. Meanwhile, insurers are blaming rising health insurance rates on health care reform, and the Obama administration is blaming the increases on insurers. This either seriously complicates their efforts to defend the bill going into the midterms, or gives them a fight against insurers they're excited to have.

This. Is. Wonkbook.

Top Stories

Stimulus expert Mark Zandi doubts Obama's tax proposals will do much for job growth, reports Lori Montgomery: "'I think they're helpful on the margin to the recovery. But they're not a game-changer,' said Mark Zandi, chief economist at Moody's Analytics and a key architect of Obama's first stimulus package. Coupled with Obama's plan to boost spending on transportation, Zandi said, the tax breaks 'a year from now might create tens of thousands of jobs' - a drop in the bucket compared with the 7.6 million jobs lost during the recession that began in December 2007... The White House has declined to say how many jobs the proposals would create or precisely how they would be paid for."

Marshall Auerback is more positive: http://bit.ly/ahPkEQ

Mitch Daniels outlines the stimulus package he'd like to see: "Payroll tax holiday. Suspend or reduce for the emergency period, say one year, the Social Security payroll tax on workers...Impoundment power. Presidents once had the authority to spend less than Congress made available through appropriation...Recall federal funds...Federal hiring and pay freeze. Better yet cut federal pay, which now vastly outstrips private-sector wages, by 10% during the emergency term...A 'freedom window'"...in which the job-killing practice of agonizingly slow environmental permitting is suspended, perhaps in favor of a self-certification safe harbor process?...Accelerated or full expensing of business investment...Reports indicate that the administration is about to propose this very idea. If so, good.

The Obama administration is standing its ground on letting the Bush tax cuts on the rich expire, reports Karen Tumulty: "'The president's viewpoint is that we cannot afford to extend the tax cuts for those making more than $250,000 a year,' White House press secretary Robert Gibbs told reporters...He also said he had never heard Orszag argue in private White House meetings for a temporary extension of the tax cuts for wealthier Americans...The current Obama White House press secretary suggested that the former Obama White House budget chief might have been wearing 'a congressional relations hat on in terms of what political price Congress might have to go through to extend different things.'"

Insurers are blaming the Affordable Care Act for rate increases this year, reports Janet Adamy: "Aetna Inc., some BlueCross BlueShield plans and other smaller carriers have asked for premium increases of between 1% and 9% to pay for extra benefits required under the law, according to filings with state regulators...The rate increases largely apply to policies for individuals and small businesses and don't include people covered by a big employer or Medicare....Nancy-Ann DeParle, the White House's top health official...said that for insurers, raising rates was 'already their modus operandi before the bill' passed. 'We believe consumers will see through this,' she said."

The administration's infrastructure bank proposal will likely not take effect this Congress, reports Ashley Halsey: "'The calendar is not our friend here, and the Republicans in the Senate aren't going to let him have a win before the election,' said a staff member on a key transportation committee, who spoke on the condition of anonymity because he was not authorized to speak on the issue. 'We really can't expect any progress this year."

Music festival interlude: The Futureheads play "Hounds of Love".

Still to come: Young investors have become as allergic to risk as older elderly investors; activists are criticizing the Obama administration for not using its antitrust powers more aggressively; the oil industry is trying to sell people on the worth of dispersants; a federal judge has refused to stay a ban on stem cell research; and workers who can package playing cards faster than robots.

Economy/FinReg

Young workers have become as allergic to financial risk as elderly investors, writes Nancy Cook: "Traditionally, we associate the early years with risky behavior—but one consequence of the recession appears to be a shift in the way 18- to 34-year-olds handle money. Affluent millennials and 30-somethings say their tolerance for risky investments is much lower than it was a year ago, rivaled only by people over the age of 65, according to a new study by Merrill Lynch Global Wealth Management...Avoiding risk may feel sensible to a generation whose financial coming-of-age has been bookended by the dotcom bubble and the subprime-mortgage meltdown."

Consumer advocates say Obama hasn't changed much on antitrust enforcement, reports Jia Lynn Yang: "The Justice Department's antitrust division has yet to exercise its signature power: to bring a case against a corporate titan suspected of abusing its dominance. In its other central role, as a merger cop, the division challenged in court fewer than half as many deals in 2009 as the Bush administration did in its last year in office, although the number of mergers also declined by about half. Instead, federal antitrust lawyers have eschewed aggressive litigation against big business in favor of a less-risky approach that works with companies to resolve anti-competitive concerns, according to many antitrust experts."

George Voinovich may serve as the Republican swing vote on the infrastructure bank proposal: http://bit.ly/aKeczv

The SEC is considering new rules on high frequency trading, reports Jesse Westbrook: "The SEC should consider whether traders with the 'best access' to markets should be obligated to buy and sell stocks to preserve liquidity, Schapiro said today in a speech at the Economic Club of New York. The agency is also examining whether stock quotations should have to stand for a minimum amount of time. Such a change would stop high-frequency traders from repeatedly placing and canceling orders in milliseconds."

Annie Lowrey argues for a millionaire's tax bracket: http://bit.ly/b5l8Mb

Steve Pearlstein argues long-term job growth requires export growth: "The problem with that strategy is that for the past two decades we have allowed our industrial and technological base to deteriorate as talent and capital were grossly misallocated toward other sectors of the economy, even as other countries were able to attract the investment, the technology and the know-how to serve the U.S. and global markets. For a time, none of this seemed to matter because we were consuming so much that we were able to support job creation at home as well as overseas. But now that the debt-fueled consumption binge is over, we find that we don't have the companies, the workers or the competitive products to replace the stuff we now import or expand our share of export markets."

Tim Noah provides a visual guide to the US' inequality problem: http://bit.ly/dyShwr

David Leonhardt thinks the housing market is a few years away from growing again: "The best advice for homeowners and would-be buyers may be to think of a house not as an investment, first and foremost, but as a place to live. If there is a good chance you will move in the next three years or so, you should probably rent. The hassles of buying and the one-time costs are just too big. Plus, house prices are not low in most places today...But if you can imagine staying much longer than a few years, you should take some comfort in the fact that the bubble seems mostly deflated. Sometime soon, prices should begin rising again. They may not quite keep up with incomes, but they will probably outpace the price of food and clothing."

Adorable animals being difficult interlude: This dog refuses to be walked.

Energy

Climate activist Bill McKibben is urging the movement to give up on Congress for the time being, reports Amy Harder: "My sense watching things in Congress was that our green groups gave it their very best shot, and as it turned out, they were significantly outgunned. The energy industry has so much money that they're able to fairly easily block even a very mild and tame legislation, which this was. And since we're not going to compete for them in cash money, we better figure out some other currency and I think that currency is going to have to be bodies and passion. And that's what we tried to do as we build movements."

The oil industry has proposed new offshore drilling regulations to the Interior Department: http://bit.ly/bTHNff

The oil industry alleges dispersants were "critical" in keeping the Gulf spill way from land, reports Andrew Restuccia: "A report written by the oil industry laying out recommendations for future oil spill responses says that the use of chemical dispersants to break up the oil that spilled into the Gulf 'was a critical element in preventing significant oiling of sensitive shoreline habitats during the [Deepwater Horizon] response.' The report, the Joint Industry Oil Spill Preparedness and Response Task Force, says 'misperceptions and knowledge gaps' about dispersants led to restrictions on their use."

David Roberts argues that regulation can spur technological innovation: http://bit.ly/cMwxSP

Weird weather is to be expected given global warming, writes Andrew Revkin: "With the global population cresting in the coming decades, our exposure to extreme events will only worsen. So whatever nations decide to do about greenhouse gas emissions, there is an urgent need to 'climate proof' human endeavors. That means building roads in Pakistan and reservoirs in Malawi that can withstand flooding. And it means no longer encouraging construction in flood plains, as we have been doing in areas around St. Louis that were submerged in the great 1993 Mississippi deluge."

How stuff is made interlude: Chinese workers put together playing card decks--by hand.

Domestic Policy

A federal judge won't stay his ruling against the Obama administration on stem cell research, reports Rob Stein: "Lamberth indicated that his injunction was less restrictive than had been interpreted by the Obama administration. 'Defendants are incorrect about much of their 'parade of horribles' that will supposedly result from this Court's preliminary injunction,' Lamberth wrote. The ruling did not necessarily apply to research that had been funded under guidelines issued during the Bush administration or that had previously been 'awarded and funded,' Lamberth wrote. He also indicated that he could make a final decision on the case soon."

Paying third graders leads to better test scores: http://bit.ly/doBmr8

The Obama administration's immigration crackdown is spreading to restaurants, reports Sarah Kershaw: "Restaurants are not the only businesses to fall under the searchlight. But until recently, immigration enforcement had been notoriously lax, with a kind of universal wink at kitchens filled with employees working either off the books or with false documents, government officials and industry experts say. But that is quickly changing, based on the rising number of investigations and the penalties being sought against restaurateurs."

For-profit colleges are stepping up anti-regulation lobbying, reports Tamar Lewin: "Some of the letters show little familiarity with the proposed regulations. For example, a Education Department official said, students at a particular school sent in dozens of hand-written letters asking for continued aid to for-profit colleges, but never mentioning the regulations. He said he called a letter-writer to ask whether the letter was intended as a comment on the regulations, and was told, 'This is what the school asked us to write.' He would not identify the school."

Young women make more than young men due to an education gap, writes Heather Boushey: "When you do the apples-to-apples comparison that the AAUW did, young women still earn less than comparably skilled men. What has changed is that there are more women with higher levels of education. Among women aged 22 to 30, a third (34 percent) have some college education and a third (35 percent) have a college degree or more. Among men in that age group, less than a third (30 percent) spent some time in college, and just over a quarter (28 percent) have a college degree. If one group (women) has more workers with more education, then they should outearn the other group."

Elizabeth Drew argues this Congress has hardly been "dysfunctional": "Democrats persevered despite the fact that the House and the Senate have different politics and different rules and that the two chambers have no love lost between them. (Thus the House, sometimes to appease certain members, has passed far more bills than the Senate has; this is not unusual and can happen no matter which party is in power.) Frustrated Democratic senators chose not to publicly get out ahead of the president for fear, some told me, of undercutting him, or vice versa. And in the end, they essentially met all of the president's major goals -- the one major exception being energy and climate legislation."

Closing credits: Wonkbook compiled with the help of Dylan Matthews and Mike Shepard. Photo credit: Pete Souza/White House.

By Ezra Klein  |  September 8, 2010; 6:50 AM ET
Categories:  Wonkbook  
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Next: Mitch Daniels has a plan

Comments


I have posted this already here before You guys should stop complaining because, one the health care we have now isnt as good as it was supposed to be. also the law has just been signed so give it some time. so if u want to say u have the right to choose tell that to ur congress men or state official. If you do not have insurance and need one You can find full medical coverage at the lowest price by calling 877-882-4740 or check http://bit.ly/9fDY7U If you have health insurance and do not care about cost just be happy about it and believe me you are not going to loose anything!

Posted by: caryblair | September 8, 2010 8:58 AM | Report abuse

i just LOVE the thought by this administration that covering dependents to age 26, ending coverage caps and eliminating copays on preventative care are FREE. Seriously.

You know why its not affecting large employers? Because most didn't implement the dep to age 26 yet as they can and most are waiting until their renewal of their policy while most small employers are doing it early.

Again Dems you can't get something for nothing. The thought that it was all coming out of insurers profits was always preposterous and now is being proven so.

Posted by: visionbrkr | September 8, 2010 9:00 AM | Report abuse

It's nothing to do with Dems or getting something for free. It's about insurer greed pure and simple.

Posted by: lauren2010 | September 8, 2010 9:25 AM | Report abuse

Additional benefits cost more money? Who could possibly have anticipated that?

Posted by: bgmma50 | September 8, 2010 9:42 AM | Report abuse

Orszag didn't call outright to extend the $250k+ tax cuts. He said he'd prefer to only retain the middle-class cuts, but if it's necessary to toss in all of them to get it past Congress, then so be it.

Therefore it makes sense that he didn't suggest it in meetings.

Posted by: nomadwolf | September 8, 2010 9:43 AM | Report abuse

lauren,

seriously? Keep spewing the hate and talking points. Please show me your credentials to determine that there's no cost to adding additional benefits. Actuaries across the country have shown that when you add something that was not covered before and require it to be covered now it will cost you.

Ezra also went into it yesterday with the SS graph that showed what changes and tweaks would do to the SS trust fund. It works both ways not just in ways that suit your idealogical bent.

Posted by: visionbrkr | September 8, 2010 9:57 AM | Report abuse

vision

I disagree with you and now I am spewing hate and talking points?

YOU are the one with the ridiculous assertion the Dems think everything is free. What kind of child believes such nonsense? The Dems have broken their backs to fund their programs over the years whilst the GOP racked up trillions in new debt.

Ezra covered all this in great depth. Among other things, the mandate will bring more business to the insurers. As you recall, insurer stocks went up after passage of the HCR bill.

YOU can't have it both ways amigo. You can't harp on the fact that nothing is yet implemented while at the same time the insurers are raising rates because of their new woes the new HCR bill is causing them.

Also, I DO EXPECT that the insurers should find some internal cost savings and become more efficient despite the new HCR bill. For example, they should stop paying their CEO's hundreds of millions of dollars in bonuses. They are ripping us off, plain and simple. They feel entitled to a profit whether by hook or crook.

They have conspired to become legal regional monopolies, they radically raised rates even before the new law was passed, they engage in massive recission practices, and so on.

I am one of Obama's and the Dems most vocal critics on this site, so don't pretend I have some ideological bent as if you don't.

Posted by: lauren2010 | September 8, 2010 10:35 AM | Report abuse

"It's nothing to do with Dems or getting something for free. It's about insurer greed pure and simple."

Lauren, insurance company profit margins are tiny. Getting rid of all insurance company profits would be offset in less than a year by rising health care costs. The average health insurer makes $100 or $200 per policy. Yup, must be insurance company greed that's responsible for $15,000 family premiums.

Reports of record profits are driven by health costs. Even tiny margins can lead to record growth in profits if revenues are growing at double digit rates.

There ain't no such thing as a free lunch. Extra benefits cost more.

http://mjperry.blogspot.com/2009/08/health-insurance-industry-ranks-86-by.html

http://mjperry.blogspot.com/2010/02/health-insurance-companies-rank-88-by.html

Medicare for all is no panacea either. While it saves on administration it has a huge fraud problem.

About 14% of all Medicare outlays are fraudulent.

And look at what the politicians say:

'Asked why it has taken Medicare so long to figure out they were being scammed, Holder told Kroft, "I think lack of resources probably. And then I think people I don't think necessarily thought that something as well intentioned as Medicare and Medicaid would necessarily attract fraudsters. But I think we have to understand that it certainly has." '

Thieves wouldn't go after a $430 billion pot of money with weak oversight because it was 'well intentioned'. ?!?!?!

The correct answer is fraud is rampant because there are no profits to defend.

At least there has been some effort lately to go after this, but somehow I doubt it will be effective. The SEC had a soaring budget under Bush II and couldn't catch Madoff even when his head was handed to them on a platter.

http://www.cbsnews.com/stories/2010/09/01/60minutes/main6825948_page4.shtml?tag=contentMain;contentBody

Posted by: justin84 | September 8, 2010 10:48 AM | Report abuse

lauren,

if they go bankrupt more business does nothing for insurers. that's like overloading doctors with patients they don't have the time to see.

Insurers stock went up slightly during the process but has since gone down although there are honestly many reasons for this so anyone that points to a blip on a stock price and say it was due to "X" is silly at best.

"YOU can't have it both ways amigo. You can't harp on the fact that nothing is yet implemented while at the same time the insurers are raising rates because of their new woes the new HCR bill is causing them."

Its called market segments Lauren. So yes I CAN have it both ways when I'm speaking of individuals and small employers vs large employers.

"Also, I DO EXPECT that the insurers should find some internal cost savings and become more efficient despite the new HCR bill. For example, they should stop paying their CEO's hundreds of millions of dollars in bonuses. They are ripping us off, plain and simple. They feel entitled to a profit whether by hook or crook."

Again more talking points. Please show me the insurer that pays its CEO hundreds of millions of dollars. Are they overpaid, YES. But they are paid much less than other CEO's of other companies their size and worth. Would you rather we not pay them at all and have idiots running the store? And as justin84 put much more eloquently than I could the far left has forever put insurer profits as much more than facts show them to be. I guess that's why most Dems got off that premise.

Your idealogical bent (IMO) is due to the fact honestly that you don't know what you're talking about. If you did you'd see that what drives costs are providers of services, not insurers.

MCI trend has been 13+% for about 5-7 years now. Insurers have NOTHING to do with that. That comes solely from providers that do unnecessary procedures and politicians that want everything under the sun covered under medical insurance regardless of the costs.

Posted by: visionbrkr | September 8, 2010 11:01 AM | Report abuse

justin84: Then let's set up strong oversight to prevent fraud in medicare. Its in the interest of taxpayers and beneficiaries to do this. What went to fraud can be used to fund strong oversight.

Posted by: rjewett | September 8, 2010 11:07 AM | Report abuse

@justin84,

"Medicare for all is no panacea either. While it saves on administration it has a huge fraud problem."

While I totally agree with you on the fraud issue I don't believe the 3% admin cost that liberals tout as the "better way". From my understanding Medicare does not show its captial costs and many of its actual expenditures in the administration of medicare. I'd love to see a true independent study that shows what the actual costs of Medicare are. I'd think when you factored in the fraud aspect (which is caused by the fact that providers are guaranteed payment within a very short time frame that attracts fraudulent providers like a moth to a lamppost in the summertime) you'd probably see true admin cost of Medicare at around 20%. Again that's just a guess but I'd love to see a true study from a truly independent source (if one is out there).

Posted by: visionbrkr | September 8, 2010 11:09 AM | Report abuse

Lauren,

These are the new mandates:

"In addition to pledging that the law would restrain increases in Americans' insurance premiums, Democrats front-loaded the legislation with early provisions they hoped would boost public support. Those include letting children stay on their parents' insurance policies until age 26, eliminating co-payments for preventive care and barring insurers from denying policies to children with pre-existing conditions, plus the elimination of the coverage caps."

Those things aren't free. And profit margins are already low. So insurance companies are adjusting their rates accordingly.

Democrats are upset because rates are rising and the insurance companies aren't providing extra benefits for free.

"I would have real deep concerns that the kinds of rate increases that you're quoting... are justified," said Nancy-Ann DeParle, the White House's top health official."

As for CEO greed, well yeah these guys are paid an insane amount, but compared to health care spending its a rounding error.

The CEOs of 7 major insurance companies made $67.86 million in 2008. Let's say that total executive compensation for the industry was 20 times that amount or $1.357 billion.

In 2008, total health care spending was $2.3 trillion. If all CEOs were paid $0 in 2008, a family with a $12,000 premium could have saved 0.059%, or about seven bucks, if that cut was evenly distributed.

Okay, let's say that insurance company executives are somehow collectively paid $5 billion, even though most CEOs at the top companies make just a few million per year (not the $24 million that Aetna's chief makes) and the small company CEOs are likely in the six figure range. That's still only 26 bucks on the family premium. In a year in which premiums are hiked 7%, the savings from free executives are gone for the $12,000 premium family after a week and a half.

Clearly, insurance company/CEO greed, while we might not be thrilled by it, is not the cause of our cost woes.
http://www.healthreformwatch.com/2009/05/20/health-insurance-ceos-total-compensation-in-2008/

http://www.chcf.org/publications/2010/04/health-care-costs-101

Posted by: justin84 | September 8, 2010 11:13 AM | Report abuse

justin84: Then let's set up strong oversight to prevent fraud in medicare. Its in the interest of taxpayers and beneficiaries to do this. What went to fraud can be used to fund strong oversight.

Posted by: rjewett | September 8, 2010 11:07 AM | Report abuse


rjewett,

You don't even need that to start with. What I'd suggest is to stop paying providers within such a short-time frame. This was done originally I believe because providers wouldn't accept the lesser amount that medicare pays unless they were paid immediately, thus increasing their cash flow. Now many states have private prompt payer laws too that make it almost as expensive for insurers to pay promptly yet insurers don't get to "set rates" like medicare does.

Make medicare hire thousands of provider relations reps that go around the country contracting medicare providers so that we can ensure that those people submitting claims are actually providing a service. That'll cost millions to set up but save billions per year. Then see where we're at.

Posted by: visionbrkr | September 8, 2010 11:14 AM | Report abuse

justin

you dont know their profit margins are tiny.

During testimony to congress last year the insurance CEOs refused to delineate how much profits they had or how many recisions they engaged in, and so on.

They surely have teams of accountants making it appear to the IRS their profits are tiny, but when their CEOs are making $100s millions in bonuses, all I can say is that you are an idiot if you truly think their profits are tiny though they enjoy regional monopolies and routinely engage in claim denials and recisions.

I personally think we should GET RID of private health insurers because they offer no tangible benefit to society except for a small number of jobs. However, I know that will never happen.

Posted by: lauren2010 | September 8, 2010 11:31 AM | Report abuse

vision

take your personal attacks and obfuscations elsewhere. I have no time for your anger or your meandering rants.

Posted by: lauren2010 | September 8, 2010 11:34 AM | Report abuse

lauren,

facts are not personal attacks.

also profit margins are a matter of financial record. You can certainly choose to ignore justin84's links if you want to ignore the facts. You can certainly have your opinion but you're not allowed your own set of facts.

Posted by: visionbrkr | September 8, 2010 11:38 AM | Report abuse

I personally think we should GET RID of private health insurers because they offer no tangible benefit to society except for a small number of jobs. However, I know that will never happen.

Posted by: lauren2010 | September 8, 2010 11:31 AM | Report abuse


and actually I would guesstimate the number of jobs in the millions when you factor in all of the ancillary positions related to the healthcare industry. Add in the individual doctors office that complains that they need a full time person to deal with insurers and we'll go up from there. But hey what's a couple million jobs when we have 9.5% unemployment and about 15% real unemployment.

Posted by: visionbrkr | September 8, 2010 11:44 AM | Report abuse

"justin84: Then let's set up strong oversight to prevent fraud in medicare. Its in the interest of taxpayers and beneficiaries to do this. What went to fraud can be used to fund strong oversight."

I definitely won't complain about a few extra dollars being devoted to fraud prevention. I do remain skeptical at how effective it will be. On the margin, extra anti-fraud dollars probably pay for themselves, but most of the $60 billion is probably going to be stolen.

It's such a large pot of money. The incentives are large and powerful for the criminals. Per the article I cited there are apparently thousands upon thousands in Miami alone.

Government anti-fraud teams are just people going to a 9/5 job. It's not their profit center that's being hurt. Sure, some people are highly motivated by putting a stop to wrongdoing, and that's a good thing. On the whole, it's hard to keep weasels away from a big pot of money by putting another couple of warm bodies in the way.

Consider the IRS. The tax gap was what, $345 billion in 2001, of which $291 billion was not FICA/payroll taxes. The government only pulled in about $1,373 billion in non FICA taxes in 2001, so about 17.5 cents of every dollar owed to the government was not paid. Central fiscal operations had a $9 billion budget in 2001 and still couldn't track down nearly a fifth of what it was owed.

Or take the SEC. The SEC budget went from about $380 million to $900 million from 2000 to 2004. Staff rose from 3,300 to 3,500.

From 1990 to 2000 the SEC budget went from about $175 million to $380 million, with staff increasing from about 2,450 to 3,300.

So the SEC has been getting more and more warm bodies, and saw on average 12%+ annual budget hikes from 1990-2004.

The SEC was unable to figure out Enron was a scam until the stock had already crashed from $90 to $20, and only a month ahead of the company's bankruptcy.

The SEC was informed that Bernie Madoff was running a scam as early as the late 90s and yet we didn't find out about Madoff's operation until it imploded upon itself.

So yeah, the SEC got Martha Stewart and gave the Fabulous Fab a good scare, but missing the big scams despite a soaring budget and staff should give us pause at how much fraud we can realistically prevent via extra funding.

Posted by: justin84 | September 8, 2010 12:12 PM | Report abuse

"you dont know their profit margins are tiny."

Lauren, do you have any evidence to the contrary? Do you have any evidence a single CEO ever made $100s of millions in a bonus in a single year? If its a bunch of CEOs earing $100s of millions in bonuses over several years well then we're right but we are right back to where we started: it's too small to matter.

A few more links:

http://money.usnews.com/money/blogs/flowchart/2009/08/25/why-health-insurers-make-lousy-villains.html

http://economix.blogs.nytimes.com/2009/09/25/how-much-money-do-insurance-companies-make-a-primer/

http://abcnews.go.com/Business/health-insurance-profits-worth-outrage/story?id=9036632

http://www.thehealthcareblog.com/the_health_care_blog/2010/04/myths-and-facts-about-health-reform.html

"During testimony to congress last year the insurance CEOs refused to delineate how much profits they had or how many recisions they engaged in, and so on."

I don't blame them. Who would want to play ball with a bunch of fools who wanted to publicly humilate them for political gain? At best*, politicans are like Barney Frank who couldn't figure out that Fannie and Freddie were slow moving train wrecks until after it was over. At worst, you have the guy who thought Guam was going to capsize because of additional U.S. military personnel being moved to the island.

Recission, while often necessary, is nasty stuff. Insurers don't want to be gamed, but it's not fun to talk about. I agree they might go a bit too far in some recession cases, but was it really a forum for amicable discussion? No, the congressional panel had brought the executives there to embarrass them. Same with profits. The panel wanted to hear some number with a 'B' in it so they could use it against the insurance companies, never mind that $2.5 billion about of $80 billion in revenue is a pretty modest profit margin.

"all I can say is that you are an idiot if you truly think their profits are tiny though they enjoy regional monopolies and routinely engage in claim denials and recisions" Lauren to me

"take your personal attacks and obfuscations elsewhere"

Lauren to visionbrkr, next post

Wow. I'm done.

Posted by: justin84 | September 8, 2010 12:43 PM | Report abuse

justin,

you forget that lauren's allowed to personally attack anyone she wants but if someone else posts facts to refute her points that's not allowed.

Oh and btw i'm still buying Japanese products so there :-)

Posted by: visionbrkr | September 8, 2010 1:00 PM | Report abuse

Justin84: "Getting rid of all insurance company profits would be offset in less than a year by rising health care costs."

No, those profits are part of the cost, EVERY year. Getting rid of all insurance company profits is a permanent 4-5% reduction in healthcare costs, applicable every year. Get rid of private insurers and you will also save another 4-5% in excess administrative costs and marketing costs every year.

Posted by: Lee_A_Arnold | September 8, 2010 1:39 PM | Report abuse

Lee,

do i have to go over this AGAIN with you? You're forgetting that 50% of insurers are NON-PROFITS and 50% of those that aren't are covering large employers that are self-insured where the profit margin lies with the employer NOT the insurer. GE for example is not making its insurer profit. So you're down to 25% of 3%. Sure it makes for a swell talking point for you all but its ludicrous to think that would have any impact at all.


"Get rid of private insurers and you will also save another 4-5% in excess administrative costs and marketing costs every year"


Wait I thought insurers admin and marketing are like 20-25%. Isn't that what HCAN and firedoglake tell us? Why did it go down to 4-5%?

Posted by: visionbrkr | September 8, 2010 2:01 PM | Report abuse

"No, those profits are part of the cost, EVERY year. Getting rid of all insurance company profits is a permanent 4-5% reduction in healthcare costs, applicable every year."

My point is that if you take a family paying $12,000 for insurance (with premiums growing 7%/yr), and then tell them they only owe $11,520 because insurer profits are gone, they'll be at $12,326.40 the next year - already paying more than the first.

"Get rid of private insurers and you will also save another 4-5% in excess administrative costs and marketing costs every year."

But public insurers are much worse at preventing fraud. Total insurance fraud is ~$100 billion, of which about $60 billion is Medicare fraud per my earlier post. If Medicare took over the whole health system and fraud still accounted for 14% of outlays, hundreds of billions would be lost to fraud.

http://www.insurancefraud.org/article.lasso?RecID=1707

Posted by: justin84 | September 8, 2010 2:02 PM | Report abuse

It would have enormous impact. CBO scored the House public option as saving 5-7% off of costs. It also reduces the long-term federal budget deficit because it therefore saves taxpayer costs in covering the uninsured. Not all administrative costs are excess costs, by the way. If we can save even more in marketing costs, then yes, that will be saved EVERY year. But are you now telling us that non-profit insurers are not applying to go profit? That profit insurers who carry employer plans are not making a profit? That because premiums go up to cover the uninsured, that means Obamacare cannot reduce overall cost GROWTH?

Posted by: Lee_A_Arnold | September 8, 2010 2:17 PM | Report abuse

Lee,

CBO only scores government programs, not its adverse affects on non-government programs. Didn't you hear too, Dems stopped talking about PPACA reducing the federal deficit because most don't believe them. Guess you didn't get the memo. Yes some insurers are trying to go for profit (and some are being rebuked in that) because they need to do that to survive. But if you don't want them to survive I'm guessing you wouldn't care much about that.

For profit insurers that carry large group self insured plans are making minimal profit usually a sliver of what is made on the individual and the small group markets.

Again i've got to say its pretty exhausting to have people act they know everything about it when they have no training, no background, no experience in it at all.

Posted by: visionbrkr | September 8, 2010 3:15 PM | Report abuse

Visionbrker, no. CBO wrote, "The Congressional Budget Office (CBO) estimates that the public plan’s premiums would be 5 percent to 7 percent lower, on average, than the premiums of private plans offered in the exchanges."


http://www.cbo.gov/ftpdocs/116xx/doc11689/Stark_Letter-HR_5808-07-22.pdf

CBO wrote a month before this, in its Long-Term Budget Outlook, that PPACA reduces the deficit, but not until after 10 years from now, at which point it reduces the long-term deficit by almost 2/3rds -- and that reduction will occur EVEN THOUGH the CBO low-balled the future general economic productivity numbers (i.e. low-balled general revenue) and also reverted medical spending to the old, HIGHER trend after 20 years because the analytical information for Obamacare is unavailable as yet.

So the experts definitely disagree with you. And anybody with a brain thinks the long-term budget is BALANCED -- IF congress sticks to pay-as-you-go, or Paygo (a very big "IF"). This is the first time since Clinton that we've had long-term budget reductions and the Republicans have never done it.

Now, the Democrats have obviously made a political decision that "Cost-savings that won't start for 10 years" isn't a campaign slogan worth fighting for. But that's not what you're saying.

So, if you're already exhausted, bring your "experts" in here to tell us why cost-savings won't ever happen. Try not to trip us up with the obvious confusion that, in medicine, "cost-savings" is likely to look more like "reductions in cost growth".

Posted by: Lee_A_Arnold | September 8, 2010 5:47 PM | Report abuse

Justin84: "But public insurers are much worse at preventing fraud." Total insurance fraud is ~$100 billion, of which about $60 billion is Medicare fraud per my earlier post. If Medicare took over the whole health system and fraud still accounted for 14% of outlays, hundreds of billions would be lost to fraud."

No, because total insurance fraud is likely to be vastly underreported right now, because it is much harder to discover fraud, IF a private insurance company itself is involved in it. Medicare is merely what we KNOW about. And on the other hand, Medicare fraud could be reduced a lot more easily with more investigative resources. The current Administration has apparently been willing to put more effort into it.

Posted by: Lee_A_Arnold | September 8, 2010 6:12 PM | Report abuse

Lee,

Again I waste my time with you for some reason.

"No, because total insurance fraud is likely to be vastly underreported right now, because it is much harder to discover fraud, IF a private insurance company itself is involved in it."

Exactly WHY would say Wellpoint be involved with doctors defrauding them? Why wouldn't they just necessarily keep whatever slim profits they make. Start making sense please.


Again yours and the CBO's deficit projections are like saying a morbidly obese man of 700 pounds will be better off if he's 400 pounds. He's still a death-trap waiting to happen but ya I guess technically he is better off.

Posted by: visionbrkr | September 8, 2010 6:52 PM | Report abuse

Lee,

Again I waste my time with you for some reason.

"No, because total insurance fraud is likely to be vastly underreported right now, because it is much harder to discover fraud, IF a private insurance company itself is involved in it."

Exactly WHY would say Wellpoint be involved with doctors defrauding them? Why wouldn't they just necessarily keep whatever slim profits they make. Start making sense please.


Again yours and the CBO's deficit projections are like saying a morbidly obese man of 700 pounds will be better off if he's 400 pounds. He's still a death-trap waiting to happen but ya I guess technically he is better off.

Posted by: visionbrkr | September 8, 2010 6:52 PM | Report abuse

Because the providers and the insurers would be in collusion, defrauding the patients. We just saw the ratings agencies in collusion with the big banking houses to defraud the financial investors. What do you think -- the health insurers have some special record of cleanliness within the financial industry? If there are crooked doctors, there must be crooked insurers. A question of character: They rescind coverage to people while hiding behind "free market" principles -- that is morally corrupt TO BEGIN WITH.

Posted by: Lee_A_Arnold | September 8, 2010 7:57 PM | Report abuse

Visionbrkr: "the CBO's deficit projections are like saying a morbidly obese man of 700 pounds will be better off if he's 400 pounds. He's still a death-trap waiting to happen but ya I guess technically he is better off."

Starting to solve the problem is Starting to solve the problem. We're all waiting breathlessly to hear how you would solve it completely with one stroke of the pen.

Posted by: Lee_A_Arnold | September 8, 2010 8:04 PM | Report abuse

"Because the providers and the insurers would be in collusion, defrauding the patients. We just saw the ratings agencies in collusion with the big banking houses to defraud the financial investors."


How do you make this crap up? Do you stay awake at night with silly conspiracy theories or what? Please explain to me how the great collusion exisits within about 800,000 individual doctors not to mention hospitals, surgery centers, pharmacies etc. Providers numbering easily into the millions all conspiring together with about 1500+ insurance companies. Please tell me you see how stupid that sounds.

You see Ezra your blog does damage if it sets people like Lee off on this crazy tangent.

I guess about 2 million+ employees at insurance companies, doctors offices, hospitals are all in on the collusion to defraud the consumer. My God you've hit the nail on the head Lee. Why hasn't any other genius come up with this fantastic theory.


Do yourself a favor and speak to a doctor. Any doctor. Ask him or her how much he or she LOVES insurance companies. Then you'll realize how silly you sound.

"If there are crooked doctors, there must be crooked insurers."

Oh my God you're onto something. I'll bet there are crooked pastry chefs, crooked window washers, crooked bus drivers (well the non-union ones at least), crooked blog writers, crooked . . . well you get the idea.


I watch Dylan Ratigan (actually listen to him) becuase I know he's got some good ideas but you honestly sound like him with your crazy conspiracy theories. I know that Fox News is for loonies on the right but seriously you should have your own show Lee on MSNBC. You'd fit right in.

Posted by: visionbrkr | September 8, 2010 10:06 PM | Report abuse

Visionbrkr: "the CBO's deficit projections are like saying a morbidly obese man of 700 pounds will be better off if he's 400 pounds. He's still a death-trap waiting to happen but ya I guess technically he is better off."

Starting to solve the problem is Starting to solve the problem. We're all waiting breathlessly to hear how you would solve it completely with one stroke of the pen.

Posted by: Lee_A_Arnold | September 8, 2010 8:04 PM | Report abuse

Lee,

no one cares what i have to say and i'm fine with that. Coherent thoughts have their benefits. First i'd start off by requiring all insurers to be non-profits. Then i'd set doctor prices at a reasonable level for all insurers as that would reduce costs of pricing. Then i'd force pharma to reduce costs. Voila, affordable healthcare.

Posted by: visionbrkr | September 8, 2010 10:10 PM | Report abuse

Visionbrkr: "Please explain to me how the great collusion exists..."

Stop twisting the arguments. I didn't write that a great collusion exists. I wrote that private fraud is likely to be vastly underreported. I have no doubt that most people are honest. Even people who want a single-payer. Still, among all the trades I have ever met and talked to, it is remarkable how many people in financial services suspect others in their own industry of dishonesty. Does it go with the territory?

Visionbrkr: "First i'd start off by requiring.... Then i'd set... Then i'd force... Voila..."

"Require, set, force." And here we have, in a nutshell, how ultimately unserious you are: A fantasy wish-list that anyone could generate, coupled along with endless whining about how Obamacare ain't perfect and how not reducing the deficit 100% equals not reducing it at all. Upon what evidence to you claim to be an "expert" with "coherent thoughts"?

Posted by: Lee_A_Arnold | September 9, 2010 10:45 AM | Report abuse

Visionbrkr: "Please explain to me how the great collusion exists..."

Stop twisting the arguments. I didn't write that a great collusion exists.

Posted by: Lee_A_Arnold | September 9, 2010 10:45 AM | Report abuse


Because the providers and the insurers would be in collusion, defrauding the patients. We just saw the ratings agencies in collusion with the big banking houses to defraud the financial investors. What do you think -- the health insurers have some special record of cleanliness within the financial industry? If there are crooked doctors, there must be crooked insurers. A question of character: They rescind coverage to people while hiding behind "free market" principles -- that is morally corrupt TO BEGIN WITH.

Posted by: Lee_A_Arnold | September 8, 2010 7:57 PM | Report abuse

So which Lee A Arnold should I believe? The first one or the second? The one last night at 7:57 PM or the one this morning at 10:45 AM? Stop while you're behind please.

My experience is almost 20 years in the healthcare industry. What's yours?

Posted by: visionbrkr | September 9, 2010 12:35 PM | Report abuse

Do you think that I wrote that ALL providers and insurers are in collusion? 20 years in the healthcare industry does not require reading comprehension skills? Is that what the problem is?

Posted by: Lee_A_Arnold | September 9, 2010 1:27 PM | Report abuse

No, because total insurance fraud is likely to be vastly underreported right now, because it is much harder to discover fraud

Posted by: Lee_A_Arnold | September 8, 2010 6:12 PM | Report abuse


So its not all but its "vastly under-reported". By the way you have NO FACTS to bear upon this just your "expert" (SNARK) opinion. Exactly where does that expertise come from again?

Again you have no expertise, no background, no knowledge of the subject. So why should anyone take what you say seriously?


Also remind me again why insurers would defraud themselves? That's like Wachovia robbing one branch to give it to another. IT MAKES NO SENSE.

Posted by: visionbrkr | September 9, 2010 1:42 PM | Report abuse

Why would insurers have to defraud themselves for fraud to take place? Google "fraud by insurers". There are 2.6 million entries. Don't come back here until you have read them all. When you find one that doesn't apply, go to the next one. Come back here only if you find something that shouldn't be already obvious.

Posted by: Lee_A_Arnold | September 9, 2010 2:17 PM | Report abuse

you do realize how looney you are right? Anybody can start a blog somewhere and where "fraud by insurers" is put together it appears. It doesn't mean that it HAPPENS. It means that some looney bin wrote about it. go get me some REAL statistics and then you can seem coherent.

Again your experience in this field is "0". You are just some raving lunatic that probably got denied coverage somewhere that has an axe to grind. Facts are really helpful and google doesn't count in this instance. SORRY.

Posted by: visionbrkr | September 9, 2010 4:32 PM | Report abuse

"Google "fraud by insurers". There are 2.6 million entries. Don't come back here until you have read them all."

Um Lee, the burden of proof falls on the person making a claim.

You made the claim that fraud by insurers is a serious problem, as a rebuttal to my argument that Medicare fraud is high and accounts for a disproportionate amount of total health insurance fraud (supported by links), and so Medicare for all risks losing hundreds of billions to fraudulent claims, nullifying much of the administrative savings. Visionbrkr says there is no evidence to support your rebuttal.

It's not visionbrkr's job to look under every rock or sift through 2.6 million google pages to verify that there is no evidence for your claim. You need to provide us with evidence or else there is no need to take your claim seriously.

I received 358,000 hits for 'flying pigs are real'. Is it reasonable for me to claim there are flying pigs, and to ask you to look through each of these pages to verify that not a one provides solid evidence to support my claim? Of course not. It is my job to find some shred of evidence to support the assertion that pigs fly, or else I have no business making it.

http://www.google.com/search?hl=en&q=flying+pigs+are+real&aq=f&aqi=&aql=&oq=&gs_rfai=

In any case, Google provides many hits which have no bearing to the original search.

I received 285,000 hits for 'lee a arnold steals candy from children'. Does visionbrkr really have to go check all of those results to determine whether or not you are a prolific candy thief, or is it incumbent on me to provide the incriminating link?

http://www.google.com/search?hl=en&q=lee+a+arnold+steals+candy+from+children&aq=f&aqi=&aql=&oq=&gs_rfai=

Of course, since we are on the topic of making baseless claims, visionbrkr could simply assert that he has in fact read all 2.6 million pages and found no evidence, and the ball would be back in your court.

Posted by: justin84 | September 9, 2010 5:41 PM | Report abuse

Justin84: "Um Lee, the burden of proof falls on the person making a claim."

And you were the one who first made the claim that fraud is worse in the public sector. So you will defend that claim while not omitting the overwhelming evidence on corporate fraud in the finance industry and not omitting the rather obvious observation made by investigators that it is very, very difficult to detect.

Posted by: Lee_A_Arnold | September 9, 2010 9:52 PM | Report abuse

justin,

wait, pigs CAN'T fly? Really??? But the internet said it was so.

Justin forgets that everyone but those involved in insurance are guilty until proven innocent in Lee's eyes.

Also I'd remind Lee that just like every industry there are good and bad apples. That goes for insurance, finance, blog writers, government, EVERYTHING. When you've got some bad apples you don't throw out the entire industry. You fix it.

Posted by: visionbrkr | September 10, 2010 9:43 AM | Report abuse

"And you were the one who first made the claim that fraud is worse in the public sector. So you will defend that claim while not omitting the overwhelming evidence on corporate fraud in the finance industry and not omitting the rather obvious observation made by investigators that it is very, very difficult to detect."

And I cited sources in support of my claim above. I've included them again below. I even gave Medicare the benefit of the doubt by using the lower $60 billion number from the cbsnews.com article than the $80 billion from insurancefraud.org.

If I'm omitting 'overwhelming' and 'obvious' evidence, why haven't you provided it?

http://www.insurancefraud.org/article.lasso?RecID=1707

http://www.cbsnews.com/stories/2010/09/01/60minutes/main6825948_page4.shtml?tag=contentMain;contentBody

I'll admit the data on fraud is nebulous and variable, but I haven't seen anything to suggest that fraud losses to private health insurers are anywhere close to those of Medicare, although certainly private insurers are defrauded too.

Here is another source with lots of estimates:

http://www.smpresource.org/Content/NavigationMenu/AboutSMPs/MedicareFraudEstimatesAMovingTarget/Medicare_Fraud_Estimates.pdf

Maybe Medicare and Medicaid fraud is just $55 billion combined. Maybe it's $100 billion. The only thing the estimates really agree on is that fraud losses are staggering. And I haven't seen any data to suggest that, on a percentage basis, that private insurers lose as much or more to fraud than the public guys.

On top of that, economic reasoning suggests that an insurer which manages to a bottom line will care more about preventing fraud than one which sits on an unlimited pot of money.

By the way, on a per person basis Medicare has higher administrative costs than private insurance, despite no marketing costs, and (what should be) economies of scale from size which isn't very encouraging. Medicare has a lot administrative expense ratio relative to total claims paid because per person claims are very high - I might add that fraudulent claims increases total claims, further reducing the apparent administrative costs.

http://timerealclearpolitics.files.wordpress.com/2009/06/admincosts1.gif

Posted by: justin84 | September 10, 2010 10:28 AM | Report abuse

"Medicare has a lot administrative expense ratio relative to total claims"

this should read as

"Medicare has low administrative expenses relative to total claims"

Posted by: justin84 | September 10, 2010 10:35 AM | Report abuse

Visionbrkr, Now you've finally adopted my position: It is the bad apples causing the problem. Indeed, it's only the bad apples causing Medicare fraud too. But notice, however, that you can't use this position to defend your nonsense that fraud is worse in the public system. In fact, it will always remain easier to discover fraud in the public system.

Posted by: Lee_A_Arnold | September 10, 2010 10:36 AM | Report abuse

Justin84: "fraud losses to private health insurers"

Not only the losses to private health insurers. We are concerned with the overall losses to the policyholders who want to pay for healthcare. This includes not merely provider and patient fraud, but also includes corporate fraud, accountancy fraud, etc., in the insurers themselves. If you are mentioning fraud in Medicare as a factor against a public system, then you have to balance it against ALL the fraud in the private system. Because we are talking about the cost of healthcare and the ultimate losses are to the people (the taxpayers, the private policyholders) who don't get the full dollar of healthcare.

Now, within private corporations, especially financial corporations, the previous indications are that fraud is huge --but it is very difficult to detect, impossible to detect really, unless there is a whistleblower (and they usually have two or three good reasons NOT to come forward), or else the fraudsters are so stupid that they crash their corporation (e.g. Enron), or perhaps an even larger debacle causes detection (e.g. the financial crisis has increased fraud cases by the Feds.)

Of course, one thing that can help reduce this sort of fraud is transparent competition, which Obamacare sets up with the state market exchanges. Even here, however, the likely outcome is oligopoly, and back to the usual problems.

Posted by: Lee_A_Arnold | September 10, 2010 11:35 AM | Report abuse

Lee,

your mixing your frauds there. We are talking about Health insurance companies (ie Aetna, United Healthcare, Wellpoint etc) and you're including financial corporations. Why? Also how can you say the following statement?

"Now, within private corporations, especially financial corporations, the previous indications are that fraud is huge --but it is very difficult to detect, impossible to detect really"

So which is it. If you're claiming its HUGE then how do you know its "impossible to detect as you say?"

Posted by: visionbrkr | September 10, 2010 12:35 PM | Report abuse

Lee,

you comparing Enron or Worldcom fraud to what you call fraud in health care companies is like me saying my local town is corrupt so yours is also corrupt. You can't say that's the case unless you have this little thing called PROOF.

and again you don't answer me as to why would a health insure defraud ITSELF. There is no financial benefit for them to doing it. I hate to tell you but insurers don't commit fraud (no matter what the internet says). Now insurers could and do rescind coverage and sometimes its not legal but that is NOT FRAUD in the true sense of the word.

Posted by: visionbrkr | September 10, 2010 12:43 PM | Report abuse

Actually the fact that your town is corrupt is a good guide to the reasons why mine might be, too.

Towns don't look to defraud themselves either. But administrators in them,...

Posted by: Lee_A_Arnold | September 10, 2010 10:29 PM | Report abuse

Lee,

its funny but during this whole debate over the last several days you don't ever once (although honestly neither do I) suggest the possibility that INDIVIDUALS that purchase healthcare could be the ones doing the fraud. I have a real life example I'm going through right now. A client of mine is dealing with a former employee who went onto COBRA and used his entire 60 days to elect and then time to make his payment and then his payment bounced and then bounced again. By the second time they gave up but we're 4-5 months after the fact now. This guy during that time frame incurred $15,000 in claims. In a normal time he defrauded the insurance company and those claims could, would and SHOULD be rescinded. Aetna won't do it. They're too afraid of the liberals of the world because as you see the pendulum has swung too far the other way.

Posted by: visionbrkr | September 10, 2010 11:37 PM | Report abuse

I have no doubt that individual policyholders might attempt to commit fraud. If they do, they should be punished. What form that punishment might take gets into a huge discussion. And now, that discussion is dependent on the new structure of ACA.

Posted by: Lee_A_Arnold | September 11, 2010 12:52 PM | Report abuse

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