Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts
Friday, November 20, 2015
Tuesday, November 25, 2014
The Haiku of Finance for 11/25/14
Big health care loophole
Illegal workers get through
Free care from clinics
Illegal workers get through
Free care from clinics
The Health Insurance Liability of San Francisco's Illegal Alien Invaders
I attended the Commonwealth Club's "Undocumented and Uninsured" talk last night. The entire evening was a one-sided advocacy of health care policy solutions favoring illegal aliens. Every one of the experts on stage owed their livelihoods to government handouts. I expected a serious debate about the impact of illegal immigration on the cost of health care. I should have known better; after all, this is San Francisco.
The San Francisco Community Clinic Consortium serves as many illegal aliens as it can handle thanks to subsidies from the federal government. Illegals can also apply to Medi-Cal and Covered California for health insurance, and since they often hold off-the-books jobs their artificially low incomes qualify them for plans that higher earners subsidize with inflated premiums. Well, that's just great, isn't it? Actually, it's not great, but I needed to throw the sarcasm out there. They can also get free treatment through Healthy San Francisco, funded by a surcharge on restaurant meals. It's ironic how lots of these illegals work under the table (pun intended) in restaurants and go without employer-based coverage, yet restaurant surcharges enable them to get free health care.
Employers have very powerful incentives to keep illegals off their books and out of employer-sponsored ACA-compliant health insurance plans. Businesses avoid a $3000 penalty per employee for ACA noncompliance if they hire illegals who are not required to enroll in an ACA plan. In turn, ACA funds handed to community health clinics like SFCCC pay for illegal aliens' health care. This loophole is a dream for pro-lawbreaking DREAMers, because they stick it to law-abiding Americans several times over. Illegals earn unreported income, get free health care, and overload a health care system that cannot anticipate their needs because it can't legally account for their existence. Law-breaking aliens become a financial tapeworm sucking funds from the health care sector while remaining hidden from financial and actuarial discovery.
Leading sources of health care reporting are not helping clarify this bad situation. Reading the California Health Report, the California Healthcare Foundation's Center for Health Reporting, and the Health Dialogues of the California Report results in perpetual obfuscation. Their breathless headlines report endless policy tweaks and suggestions for additional subsidies, with the overarching goal of helping plan participants game the system any way possible. The progressive mindset has thoroughly infected the California health care sector now that ACA has made it an oligopoly for providers and an entitlement for an illegal constituency. The California Endowment's Reporting on Health project might help clear the air if it sticks to data analysis.
San Francisco's reputation as one of the most progressive cities in the state is not doing much to help the illegals who end up in Medi-Cal or Healthy San Francisco. The state's Office of the Patient Advocate has report cards that tell the tale. The Medi-Cal managed care report card for San Francisco says it all, with most of the health care options scoring average or lower compared to the rest of the state. Way to go, San Francisco. Being a "sanctuary city" promising safe haven for illegals facing deportation sure doesn't do them many health care favors.
The one panelist at the Commonwealth Club who self-identified as a DREAMer never expressed any remorse that he had lied to various legal authorities his entire young life to obtain benefits that are reserved for citizens. His sense of entitlement to break the law was breathtaking to behold. I thought about contacting US Immigration and Customs Enforcement but I now realize that would be an exercise in futility. The Immigration Accountability Executive Actions announced last week now prevent ICE from capturing lawbreakers like that DREAMer panelist. He is now free to pursue his medical degree in the place of a law-abiding citizen whose academic enrollment he stole.
I will not maintain the polite fiction that an invading horde of squatters constitutes an aspirational class of future immigrants. Advocates for illegal aliens' health care policies have no clue how the economy works. They do have a very good understanding of how electoral maps work. More illegal invaders crossing an unsecured border mean more votes (not checked with identification cards, of course) for politicians who promise these free handouts. San Francisco's public policy elite continues to plan more giveaways to alien invaders, with no thought to the law-abiding US citizens they impoverish.
The San Francisco Community Clinic Consortium serves as many illegal aliens as it can handle thanks to subsidies from the federal government. Illegals can also apply to Medi-Cal and Covered California for health insurance, and since they often hold off-the-books jobs their artificially low incomes qualify them for plans that higher earners subsidize with inflated premiums. Well, that's just great, isn't it? Actually, it's not great, but I needed to throw the sarcasm out there. They can also get free treatment through Healthy San Francisco, funded by a surcharge on restaurant meals. It's ironic how lots of these illegals work under the table (pun intended) in restaurants and go without employer-based coverage, yet restaurant surcharges enable them to get free health care.
Employers have very powerful incentives to keep illegals off their books and out of employer-sponsored ACA-compliant health insurance plans. Businesses avoid a $3000 penalty per employee for ACA noncompliance if they hire illegals who are not required to enroll in an ACA plan. In turn, ACA funds handed to community health clinics like SFCCC pay for illegal aliens' health care. This loophole is a dream for pro-lawbreaking DREAMers, because they stick it to law-abiding Americans several times over. Illegals earn unreported income, get free health care, and overload a health care system that cannot anticipate their needs because it can't legally account for their existence. Law-breaking aliens become a financial tapeworm sucking funds from the health care sector while remaining hidden from financial and actuarial discovery.
Leading sources of health care reporting are not helping clarify this bad situation. Reading the California Health Report, the California Healthcare Foundation's Center for Health Reporting, and the Health Dialogues of the California Report results in perpetual obfuscation. Their breathless headlines report endless policy tweaks and suggestions for additional subsidies, with the overarching goal of helping plan participants game the system any way possible. The progressive mindset has thoroughly infected the California health care sector now that ACA has made it an oligopoly for providers and an entitlement for an illegal constituency. The California Endowment's Reporting on Health project might help clear the air if it sticks to data analysis.
San Francisco's reputation as one of the most progressive cities in the state is not doing much to help the illegals who end up in Medi-Cal or Healthy San Francisco. The state's Office of the Patient Advocate has report cards that tell the tale. The Medi-Cal managed care report card for San Francisco says it all, with most of the health care options scoring average or lower compared to the rest of the state. Way to go, San Francisco. Being a "sanctuary city" promising safe haven for illegals facing deportation sure doesn't do them many health care favors.
The one panelist at the Commonwealth Club who self-identified as a DREAMer never expressed any remorse that he had lied to various legal authorities his entire young life to obtain benefits that are reserved for citizens. His sense of entitlement to break the law was breathtaking to behold. I thought about contacting US Immigration and Customs Enforcement but I now realize that would be an exercise in futility. The Immigration Accountability Executive Actions announced last week now prevent ICE from capturing lawbreakers like that DREAMer panelist. He is now free to pursue his medical degree in the place of a law-abiding citizen whose academic enrollment he stole.
I will not maintain the polite fiction that an invading horde of squatters constitutes an aspirational class of future immigrants. Advocates for illegal aliens' health care policies have no clue how the economy works. They do have a very good understanding of how electoral maps work. More illegal invaders crossing an unsecured border mean more votes (not checked with identification cards, of course) for politicians who promise these free handouts. San Francisco's public policy elite continues to plan more giveaways to alien invaders, with no thought to the law-abiding US citizens they impoverish.
Saturday, March 15, 2014
Silicon Valley Billionaire Wastes Fortune On Life Insurance
Some Silicon Valley titan just dropped serious coin on the world's most expensive life insurance policy. This unnamed billionaire is probably very intelligent in her or his business career. That talent didn't prevent this very stupid decision. There are cheaper ways to incentivize one's heirs while leaving them the bulk of a hard-earned fortune.
This person could have pulled a George Lucas and dumped the bulk of their assets into a charitable foundation after selling off whatever enterprise they owned. They also could have set up separate charitable remainder trusts for each beneficiary among their next of kin and recorded major tax deductions. Charitable gifts work pretty much the same way for publicly traded securities, restricted shares, and entire private enterprises. The only things that would be difficult to gift might be "future assets" like deferred compensation from options or bonuses subject to earnouts. If this person's financial advisory team proposed a range of options for the client's consideration then they fulfilled their fiduciary duties.
Insurance products are among the most expensive things investment advisers can sell. All this nameless big shot accomplished was the transfer of risk from their portfolio to a collection of insurance companies. If one of those insurance companies ends up insolvent in the next financial crisis, like AIG was in the last one, that policy could be toast. Life insurance has a role to play in creating an estate that will provide income in the absence of a head of household. This billionaire doesn't have that problem. Their life insurance policy didn't need to be this big. Someone just wasted a lot of money for more peace of mind.
This person could have pulled a George Lucas and dumped the bulk of their assets into a charitable foundation after selling off whatever enterprise they owned. They also could have set up separate charitable remainder trusts for each beneficiary among their next of kin and recorded major tax deductions. Charitable gifts work pretty much the same way for publicly traded securities, restricted shares, and entire private enterprises. The only things that would be difficult to gift might be "future assets" like deferred compensation from options or bonuses subject to earnouts. If this person's financial advisory team proposed a range of options for the client's consideration then they fulfilled their fiduciary duties.
Insurance products are among the most expensive things investment advisers can sell. All this nameless big shot accomplished was the transfer of risk from their portfolio to a collection of insurance companies. If one of those insurance companies ends up insolvent in the next financial crisis, like AIG was in the last one, that policy could be toast. Life insurance has a role to play in creating an estate that will provide income in the absence of a head of household. This billionaire doesn't have that problem. Their life insurance policy didn't need to be this big. Someone just wasted a lot of money for more peace of mind.
Saturday, February 01, 2014
USAA And GEICO Compete For Monkey Business
I shopped around a couple of automobile insurance quotes before I renewed my policy. It came down to a choice between my current insurer USAA and the possibility of switching to GEICO. They both have ultra-cheap business models because they don't maintain a horde of field offices with sales reps running up marketing expenses and administrative overhead.
I fiddled with the coverage criteria and discovered that I could dramatically reduce my premiums by adjusting my coverage for bodily injury and property damage to cover only the nationally-adjusted average costs per driver in an auto accident. Check out the RMIIA's data on the cost of car crashes. The National Safety Council also has estimates of the costs of motor vehicle injuries. This is why I'm ten steps ahead of the average American consumer. I use open-source Big Data products as the basis for my analysis, and I keep my decisions as rational as humanly possible. This data is now easy to find, so I no longer have any excuse for overpaying for coverage out of ignorance of the likeliest costs.
It came down to a pretty close decision, and I ended up staying with USAA. They carried over a discount from my last term that made the final cost worthwhile. I don't know if that discount will still apply when I renew my policy, and if it doesn't then GEICO's military discount may be the tie-breaker next time. Another feather in USAA's cap is the ability of its banking and brokerage services to shave a few bucks off routine transaction costs. I don't need that right now but it may come in handy if I have to move my savings and checking accounts from TBTF banks.
This cost comparison exercise drove home a really cool lesson. The difference in product cost between the two companies for the same policy terms was microscopic. USAA is a private club run by retired military officers who've never met a bottom line in their entire lives. GEICO is a Berkshire Hathaway company and Warren Buffett handpicks their executives. The difference in product characteristics and cost is virtually nonexistent because insurance company metrics are determined by actuaries, the original Big Data professionals who are so rational they may as well be inhuman. The performance of an insurance company has nothing to do with its executives' professional competence and everything to do with the structure of data profiles and risk pools. This is something the architects of the Affordable Care Act are going to learn the hard way as plan providers drop out of the exchanges.
Wednesday, January 29, 2014
ACA Requires Gender Discrimination Without Actuarial Justification
The Affordable Care Act's supporters praise it for adding mandatory coverage to participating plans. They allege that men who buy plans covering birth control, pregnancy, and endometriosis redress historic price discrimination against women who have bought insurance. This flawed logic is easy to debunk. This law enshrines a new form of price discrimination against men by replacing actuarial results with a contrived political argument.
Price differences in the insurance sector are not the result of discrimination against gender, race, or other protected categories. Pricing for policies of any type is always the result of carefully calculated actuarial solutions that distribute the costs of rare but discrete events across a large pool of the insured. If a policy covering pregnancy is more expensive than one that does not, its because that service has a cost that must be distributed among a pool of people likely to experience that condition. Men do not experience pregnancy. Forcing them to participate in a risk pool for pregnancy is like mandating that someone who does not own a car must purchase automobile collision insurance.
Arguing that men should share the cost of birth control and pregnancy policy coverage because they potentially share in procreation ignores participants' risk profiles. A sixty-year old man is at far less risk of impregnating a woman than a twenty-year old man. Women also have the option of pursuing pregnancy trough artificial insemination, and anonymous male donors typically do not incur paternal obligations in the eyes of the law. Some emerging case law has begun to establish such paternal obligations for male donors who did not fulfill legal requirements that would have shielded them from parental liability for child support, but that is a minor issue with little relationship to insurance risk pools.
Requiring men to pay for coverage of endometriosis is even more ludicrous; that is a medical condition specific to women. Taking this logic further would require women plan subscribers to pay for erectile dysfunction and prostate cancer treatments, which of course disproportionately affect men. I have yet to see those arguments appear in public media. Perhaps I haven't looked hard enough for those arguments or for plans' coverage requirements. Requiring men to join a risk pool that covers women's specific conditions, without requiring the reverse commitment from women to cover male risks, is exactly the kind of gender discrimination the ACA's defenders should oppose if they are intellectually honest.
The ACA's authors in the health care sector knew that the appeal of cheaper coverage for female-specific conditions would help sell the law to women voters. The price that health care providers can extract on the back end - higher deductibles, suppression of innovation through a device tax, and no real cost controls - was easy to hide with rhetoric. The bait and switch worked and the health care sector maintains its ability to extract surplus rents in the manner of a rentier regime. ACA plan pricing sets a precedent for politically determined investment outcomes. This precedent suborns fiduciary duties and actuarial results to the will of a political majority. This revelation is lost on many Americans.
The US Supreme Court upheld the legality of the ACA mandate as a tax, establishing a firm legal precedent for politics to determine investment outcomes with little regard for links between cost and consequences. I expect further legal developments under the cover of fairness to redistribute wealth according to the wishes of a donor base. The challenge for economic actors who want to safeguard wealth in this environment is to become an effective donor constituency.
Price differences in the insurance sector are not the result of discrimination against gender, race, or other protected categories. Pricing for policies of any type is always the result of carefully calculated actuarial solutions that distribute the costs of rare but discrete events across a large pool of the insured. If a policy covering pregnancy is more expensive than one that does not, its because that service has a cost that must be distributed among a pool of people likely to experience that condition. Men do not experience pregnancy. Forcing them to participate in a risk pool for pregnancy is like mandating that someone who does not own a car must purchase automobile collision insurance.
Arguing that men should share the cost of birth control and pregnancy policy coverage because they potentially share in procreation ignores participants' risk profiles. A sixty-year old man is at far less risk of impregnating a woman than a twenty-year old man. Women also have the option of pursuing pregnancy trough artificial insemination, and anonymous male donors typically do not incur paternal obligations in the eyes of the law. Some emerging case law has begun to establish such paternal obligations for male donors who did not fulfill legal requirements that would have shielded them from parental liability for child support, but that is a minor issue with little relationship to insurance risk pools.
Requiring men to pay for coverage of endometriosis is even more ludicrous; that is a medical condition specific to women. Taking this logic further would require women plan subscribers to pay for erectile dysfunction and prostate cancer treatments, which of course disproportionately affect men. I have yet to see those arguments appear in public media. Perhaps I haven't looked hard enough for those arguments or for plans' coverage requirements. Requiring men to join a risk pool that covers women's specific conditions, without requiring the reverse commitment from women to cover male risks, is exactly the kind of gender discrimination the ACA's defenders should oppose if they are intellectually honest.
The ACA's authors in the health care sector knew that the appeal of cheaper coverage for female-specific conditions would help sell the law to women voters. The price that health care providers can extract on the back end - higher deductibles, suppression of innovation through a device tax, and no real cost controls - was easy to hide with rhetoric. The bait and switch worked and the health care sector maintains its ability to extract surplus rents in the manner of a rentier regime. ACA plan pricing sets a precedent for politically determined investment outcomes. This precedent suborns fiduciary duties and actuarial results to the will of a political majority. This revelation is lost on many Americans.
The US Supreme Court upheld the legality of the ACA mandate as a tax, establishing a firm legal precedent for politics to determine investment outcomes with little regard for links between cost and consequences. I expect further legal developments under the cover of fairness to redistribute wealth according to the wishes of a donor base. The challenge for economic actors who want to safeguard wealth in this environment is to become an effective donor constituency.
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