ACA Reform: the newest wrinkle

OK, it’s widely understood that “ethical Congressman” is an oxymoron if not an entirely extinct species.

Georgia Representative Tom Price is a Congressman.  He also invests iskunksn medical technology and pharmaceutical companies to the tune of about $300,000.  He also introduces bills and writes letters to regulators to help the companies whose stock he owns — boosting the value of  his own investment.   In turn, the companies donate to his re-election campaigns. (The Wall Street Journal first broke this story in December; CNN added new information today.)

Basically Tom Price is a poster child for “conflict-of-interest.”  Government is supposed to be “for the people”, not for your own wallet.

Price is also Trumps nominee for Health and Human Services Secretary and Trump’s designated leader on ACA reform.

If he’s leading the charge, just who is the real beneficiary of ACA reform going to be? 

In fairness, Price says that if he gets this new job, he will get rid of all of his stocks within 90 days.  However, he’s been in Congress for 11 years, with a consistent pattern of behavior.  That’s going to change overnight?? Plus ACA repeal reportedly will occur before he has liquidated his stocks, if it happens as promised.

Of course, the voters of Georgia share the blame for this mess. You elected someone five times who has consistently violated ethics rules.  How exactly does that work?   

Price’s original proposals for ACA repeal included the following five elements (quoted from NPR article cited below):

  1. Price’s plan offers fixed tax credits so people can buy their own insurance on the private market. The credit starts at $1,200 a year and rises with age, but isn’t adjusted for income. Everyone receives the same credit whether they are rich or poor. People on Medicaid, Medicare, the military health plan known as Tricare, or the Veterans Affairs’ health plan could opt instead for the tax credit to buy private insurance.
  2. Price advocates for expansion of health savings accounts, which allow people to save money before taxes to pay for health care. This includes allowing people who are covered by government health programs including Medicare and the VA to contribute to health savings accounts to pay for premiums and copayments. These proposals are included in Ryan’s plan.
  3. People with existing medical conditions couldn’t be denied coverage under Price’s plan as long as they had continuous insurance for 18 months prior to selecting a new policy. If they didn’t, then they could be denied coverage for that condition for up to 18 months after buying a new plan.
  4. The Price proposal limits the amount of money companies can deduct from their taxes for employee health insurance expenses. Companies can deduct up to $20,000 for a family health insurance plan and $8,000 for an individual. The goal is to discourage companies from offering overly generous insurance benefits to their workers. Ryan’s plan proposes a cap on the employer tax deduction but doesn’t specify the level of the cap.
  5. States would get federal money to create so-called high-risk pools under Price’s plan. These are government-run health plans for people with existing medical conditions who can’t get affordable health insurance on the private market. Critics say high-risk pools have been tried in as many as 34 states and largely failed because they were routinely underfunded.

Given that a Silver level ACA plan in NJ can cost upwards of $900 per month, a $1,200 annual credit doesn’t amount to much. And why should the credit be the same for a millionaire as for someone making minimum wage?  The pre-existing condition rule means that some people with long term health issues will be excluded from coverage. 

Finally, do Price’s ethics issues have anything to do with GOP efforts earlier this month to reduce or eliminate the independent Congressional Ethics Office? 

The Affordable Care Act (aka Obamacare) repeal is turning into a circus.  I’m sure there are more acts to follow.


Sources:

  • http://www.cnn.com/2017/01/16/politics/tom-price-bill-aiding-company/index.html
  • http://www.npr.org/sections/health-shots/2016/11/29/503720671/5-things-to-know-about-rep-tom-prices-health-care-ideas
  • http://ktla.com/2017/01/16/trumps-hhs-nominee-introduced-legislation-to-help-company-soon-after-investing-in-it-house-records/
  • http://www.msnbc.com/rachel-maddow/watch/ethics-questions-loom-over-trump-hhs-pick-rep-tom-price-839983683992
  • http://www.wsj.com/articles/donald-trumps-pick-for-health-secretary-traded-medical-stocks-while-in-house-1482451061

Retirement: the Fading Dream

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Most Americans today will never be able to afford to retire.  Period.  Retirement was a concept basically created in the 1950s, and a number of factors have come together to end the dream for the great majority of Americans.  The end of the dream in turn necessitates changes in how Americans live.  These changes will affect the economy and politics.  Arguably, they already are.

Here are some of the fundamentals:

  1. The average US household has $35,000 in funds at age 65.
  2. The average Social Security payment in 2016 is $1,341 per month.
    https://faq.ssa.gov/link/portal/34011/34019/Article/3736/What-is-the-average-monthly-benefit-for-a-retired-worker
  3. According to Fidelity Investments, the average couple will encounter $245,000 in out-of-pocket health care expenses after age 65.
    https://www.fidelity.com/about-fidelity/employer-services/health-care-costs-for-couples-retirement-rise
  4. The Fidelity estimate excludes long term care/nursing home costs.  According to Morningstar, we need to add 2.4 years of nursing home or long term care costs, at approximately $13,000 per month per person, to the Fidelity total.  Subtracting what Medicare covers of nursing home expenses, that’s roughly $347,000 per person.

Basically, the average person needs upwards of $800,000 in liquid assets to retire.  However, at age 65, the average American has $35,000 in savings.

It’s pretty easy to see that these numbers don’t work for most people.  And that doesn’t consider the 10% of seniors who are caring for a grandchild.

So, how can the average person cope?  

  • They can work.  However, that takes jobs away from younger workers.  Job creation in the US isn’t strong enough to support both an influx of new high school and college grads and oldsters returning to work.  However, in this competition, older workers are handicapped as large corporations don’t like to hire them.  Seniors will return to the labor market at a much lower rate of pay than they had previously.
  • They can die at an earlier age.  In the US, low income males are doing that today, having lost 4 years of life expectancy since 2000.
  • They can deplete assets and let state aid contribute to covering expenses.  However, that means living one’s last years in extreme poverty.  People with severe, terminal illnesses such as advanced cancer are often having to do this.
  • They can move in with children.  The incidence of multi-generational families is on the rise.  That will change the kind of home buyers will want.
  • They can move outside the US to where health care is much less costly.  Central America is the destination of choice for emigres.  The US government doesn’t publish statistics on citizens who live outside the country.  Current third party estimates range from 3 million to 9 million, excluding military and diplomatic personnel and their families.  All estimates agree that the number is increasing.

[NOTE TO POLITICIANS:  More Mexicans are now leaving the US than entering, counting both those with and without documentation.  Why is this a point of discussion this year?]

Several of these trends suggest that there may be another sell-off of single family homes in the future, with another round of declining home prices, underwater mortgages and foreclosures.  Boomers will need money for health expenses.

The growing volume of available senior labor may put a cap on wage increases, and increase deflationary pressure.

The fundamental problem is that today’s Americans reached adulthood with certain expectations about how their life would be.  Those expectations are being dashed, generating the anger that is playing out in the current election season.  The disappointment and anger is still in its early stages, and may get much worse.

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In this context, its rather amazing that so many people wanted to run for the Presidency this year.  The next four years are likely to be traumatic, and the next chief executive is likely to leave office after one term as a much hated individual.