Tidbits Quotations
To Accompany the December 31, 2013 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

Signing up for Obamacare "should be our New Year's resolutions to ourselves.”|
Michele Obama

While the Affordable Care Act clearly benefits those at the low and high ends of the income scale, many middle-class Americans don’t qualify for health care subsidies, and are facing steep premium prices.
The New York Times
, December 21, 2013
Health Care Law Frustrates Many in the Middle Class, by Katie Thomas, Reed Abelson, and Jo Craven McGinty,

Jensen Comment
Hello! It's like the progressive press is at last awakening to a fact that we knew all along. Not mentioned is that you must pay even more to choose your own hospital and doctors under the very high priced Cadillac plan options ---

It makes it likely that premiums will rise. And that more insurers (and health providers) will drop out of this market, and fewer will enter.
"New State Data On Obamacare Enrollment Trends Show How Scheme Is Failing," by Scott Gottlieb, Forbes, December 20, 2013 ---

Obama would make a good presidential candidate because he;s "light-skinned" black man "with no Negro dialect."
Harry Reid, Senate Majority Leader in 2008 ---

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

Barack Obama beat Mitt Romney in the 2012 elections 65,909,451 Obama to 60,932,176 Romney votes.
Among the 48 million people of food stamps, how many voted for Mitt Romney?
The GOP will never win without gaining half the food stamp votes.

10 Quotes from Presidents Washington & Lincoln – President’s Day ---

“We ought not to look back, unless it is to derive useful lessons from past errors and for the purpose of profiting by dear bought experience” – George Washington

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” – Abraham Lincoln

If you look for the bad in people expecting to find it, you surely will.” – Abraham Lincoln

“Always bear in mind that your own resolution to succeed is more important than any other one thing.” – Abraham Lincoln

“You cannot build character and courage by taking away a man’s initiative and independence.” – Abraham Lincoln

“True friendship is a plant of slow growth, and must undergo and withstand the shocks of adversity, before it is entitled to the appellation.” – George Washington

“It is better to offer no excuse than a bad one.” – George Washington

If you look for the bad in people expecting to find it, you surely will.” – Abraham Lincoln

“I hope I shall always possess firmness and virtue enough to maintain what I consider the most enviable of all titles, the character of an “Honest Man”.” – George Washington

If you look for the bad in people expecting to find it, you surely will.” – Abraham Lincoln

Forwarded by Auntie Bev
I did not verify the numbers

 Teddy Roosevelt - 3
 All Others until FDR - 0
 FDR - 11 in 16 years
 Truman - 5 in 7 years
 Ike - 2 in 8 years
 Kennedy - 4 in 3 years
 LBJ - 4 in 5 years
 Nixon - 1 in 6 years
 Ford - 3 in 2 years
 Carter - 3 in 4 years
 Reagan - 5 in 8 years
 Bush - 3 in 4 years
 Clinton - 15 in 8 years
 George W. Bush - 62 in 8 years

 Obama - 923 in 3 1/2 years! More than 1000+ and counting Executive Orders in 6 years...



"Cornell Law Prof to Challenge American Studies Association's 501(c)(3) Status Over Boycott of Israeli Universities," by Paul Caron, TaxProf Blog, December 18, 2013 ---

A venerable American academic group's planned boycott of Israeli educational and cultural institutions over that nation's conflict with Palestinians has prompted a backlash from Jewish groups and at least one critic who plans to challenge the organization's tax exempt status.

The 5,000-member American Studies Association, which bills itself as the nation’s oldest and largest association devoted to American culture and history, voted Sunday to boycott Israeli academic institutions. More than 1,200 members voted and 66 percent endorsed the resolution, which was unanimously supported earlier this month by the group's national council. ...

At least one critic told FoxNews.com he’ll be taking his issues with Monday’s announcement to federal officials at the Internal Revenue Service. William Jacobson, a professor of law at Cornell Law School who runs LegalInsurrection.com, said he believes the boycott violates the group’s 501(c)(3) tax exemption status pertaining to its educational classification.

“They can hold any view they want on the Middle East, but now that, as an organization, they have joined a boycott of Israel, they’re now a boycott organization and no longer a charitable one,” Jacobson said. “Our intention is to file a whistleblower claim with the IRS, asking the IRS to look into whether this conduct negates their 501(c)(3) status. I expect that to be done by year-end, if not sooner.”

Jacobson has retained Washington-based attorney Alan Dye to file that challenge, he said. And since the code pertaining those organizations indicates they must be “organized and operated exclusively for religious, charitable … or educational purposes,” Jacobson said the case is likely a winning one. To me, this is not a pro-Israel or pro-Palestine issue,” Jacobson told FoxNews.com. “You don’t engage in academic boycott. An academic boycott, particularly by an academic organization, is really self-contradictory.”

Continued in article

"Scholars Debate Significance of American Studies Assn.’s Vote to Boycott Israel," by Beth McMurtrie, Chronicle of Higher Education, December 16, 2013 ---

"Against Academic Boycotts," by Henry Reichman, Inside Higher Ed, December 12, 2013 ---

Indiana U. to Withdraw from American Studies Group ---

"The Non-Boycott of Israeli Science," by Elizabeth Redden, Inside Higher Ed, December 20, 2013 ---

The IRS Fact Check Scandal History early on in May 2013
What were the most blatant lies? ---

The IRS Fact Check Scandal History early on in December 2013 (Day 227) ---

Fraud Beat
My wife just got off the phone with a woman XXXXX who has been her friend for over 40 years. They used to work together in a hospital. The woman said her daughter and two grandchildren living across the street in Longview, Texas got a divorce. But the only reason for the divorce was to be able to quit her job and collect welfare and food stamps. The former husband who makes $73.000 per year still lives in the same house as if the divorce never happened. They're expecting another baby in April. The daughter is also on Medicaid and has been receiving free medical care since the "divorce."

XXXXX and her husband gave them $40,000 for a down payment on a wonderful home across the street and are now making the mortgage payments until their daughter and her "former" husband get out from under a mountain of debt. I think the house is in her "former "husband's name so XXXXX's daughter can collect the welfare and Medicaid assistance. That would no longer be necessary if they lived in one of the Medicaid expansion states where with proper financial planning millionaires can be on Medicaid since the only test for Medicaid is now income and not assets.

The daughter claims she's now living with her parents, but that is a bold faced lie. Both the daughter her "former" husband are recovering drug addicts and living in that house across the street. . I wish them well. Yeah Right!

Bob Jensen's Fraud Updates are at

"The incredible, shrinking New York" by Jazz Shaw, Hot Air, December 28, 2013 ---

. . .

Doug also cites the weather, as does the previous New York Times article. Personally, while many people find the climate in the South appealing, I think it’s far from enough to cause this sort of shift. The state government wrings its hands over the loss of jobs, but continues to keep a moratorium on fracking, which has benefited our neighbors in Pennsylvania greatly. Stimulus plans to attract business such as the ones Doug describes sound great on paper, but do nothing to address the hoards of businesses who have already left one of the unfriendliest tax climates in the nation. Nanny state regulations make New York one of the least free in the nation and many upstate folks have simply tired of it.

The punishment for these policies will not be imposed by Washington or outside think tanks. It’s taking place before our eyes, and as people leave, the welfare rolls and unemployment lines swell and our congressional representation in Congress continues to shrink. (We lost two seats after the 2010 census and will likely lose at least that many more in 2020.) New York is taxing and regulating itself into a larger version of Detroit. The process is slowed because of the constant influx of wealth to Wall Street, but that’s not enough to staunch the bleeding, and the trend continues downward.

"Hudson River town wonders what's next as GE plant heads south in latest NY manufacturing loss," by Michael Hill, The Republic, December 21, 2013 ---

FORT EDWARD, New York — When General Electric moves jobs from its capacitor plant in this Hudson River town next year, worker Mark Rock figures he might have to leave, too.

About 200 jobs will head south as soon as September when GE sends local operations to Florida to cut costs. While New York has had successes in the constant geographical tug of war for jobs, manufacturing jobs like these have been dwindling for decades. People in this area south of the Adirondack Mountains are the latest to wonder what comes next.

"The high-paying jobs that we have now in the area are going to shrink," said Rock, a 41-year-year-old married father of two. "If I don't find something making at least 20 bucks an hour in New York state, then I'm skipping town."

The loss of manufacturing jobs is a national trend, but New York has felt the sting more than some other states. Paul Blackley, an economics professor at Le Moyne College in Syracuse, said New York state lost 42 percent of manufacturing jobs from 1990 through 2006. Over the same period, Florida lost 18 percent.

Blackley said there's no single reason for New York's drop, but business costs and an older infrastructure likely play a role.

"I think your tax climate, your labor costs, your old capital are probably three of the biggest factors, not only in this specific move, but a lot of the moves that you see out of New York state," he said.

The GE plant has sat by a narrow stretch of the Hudson River in this town of 6,000 since World War II. It makes electrical capacitors for power transmission systems and industrial uses.

The Fort Edward facility and a long-closed sister plant in neighboring Hudson Falls used PCBs in production until 1977, and river sediment contaminated by discharges of the oily substance is being dredged by GE as part of a multi-year federal Superfund cleanup that could cost $2 billion.

With 177 production workers and 20 salaried employees, GE is not the biggest employer in the region. But the Fairfield, Connecticut-based company pays well. Production workers here average $28.50 an hour, according to estimates cited by the United Electrical, Radio and Machine Workers Local 332. PHOTO: In this Dec. 11, 2013 photo, a man walks past the General Electric plant in Fort Edward, N.Y. GE has been a big presence in this little upper-Hudson River town for almost 70 years, employing generations and leaving a $2 billion mess in the river. Now GE is moving its operations to Florida. (AP Photo/Mike Groll) In this Dec. 11, 2013 photo, a man walks past the General Electric plant in Fort Edward, N.Y. GE has been a big presence in this little upper-Hudson River town for almost 70 years, employing generations and leaving a $2 billion mess in the river. Now GE is moving its operations to Florida. (AP Photo/Mike Groll)

GE officials say the plant has been losing money for several years and they will move to an existing facility in Clearwater, Florida, where the company can take advantage of efficiencies of scale. GE spokeswoman Christine Horne said their competitors are in lower-cost locations.

Village of Fort Edward Mayor Matthew Traver said the loss of GE is not a knockout blow — Fort Edward still has a tissue plant and there are manufacturing jobs in the surrounding small cities and rural areas. But many here worry about an estimated $12 million in wages disappearing.

"What did we do wrong?" asked John Weber, sitting on a stool at his restaurant, Ye Old Fort Diner. "Did our union get too strong? Did GE get too greedy? What?"

GE has been accused of abandoning New York. But Horne noted that GE has actually created more than 1,600 jobs in the nearby Albany area over the past several years, including some 450 production jobs in Schenectady.

The company's actions illustrate how New York is constantly is losing and gaining jobs. GE'S Fort Edward announcement last month came the same day Gov. Andrew Cuomo announced that the Ford Motor Co. would make a $150 million investment at its Buffalo Stamping Plant, creating 350 new jobs there.

New York actually added 8,180 private-sector jobs in November, according to the latest ADP Regional Employment Report, though manufacturing jobs decreased by 80 in that month.

Wages have loomed large as an issue in Fort Edward. Union officials involved in fruitless negotiations with GE this fall to keep the company in Fort Edward said they would have had to reduce average wages to around $12 an hour to hit GE's savings target. GE disagrees but did not provide its own figure.

Average hourly wages for some manufacturing jobs in the Clearwater area can be 11 to 23 percent less than the area around Fort Edward, according to Bureau of Labor Statistics wage data. Florida also is a "right-to-work" state, which means workers can't be required to join a union as a condition of employment. The Clearwater jobs will not be union jobs. Horne said they will pay prevailing wages.

"We need to improve our overall cost structure to be competitive. Wages are only one element of that cost structure," Horne said.

At the union headquarters near the GE plant, where the "Keep it Made in Fort Edward" signs lay stacked in by the door, workers know there are other jobs in the area. But they worry it will be harder to make ends meet.

Continued in article

An Iron Curtain at the Mexican Border --- Yeah Right!
A 27-year-old Mexican national was arrested after he allegedly led deputies on a pursuit and then jumped into a water-filled canal
Read more: http://www.myfoxphoenix.com/story/24315076/2013/12/27/pcso-arrest-man-deported-10-times#ixzz2ospRaSfq

He was last deported in June after being in prison for 15 months, says U.S. Border Patrol. Padilla allegedly told deputies he walked across the border again two weeks ago.
Read more: http://www.myfoxphoenix.com/story/24315076/2013/12/27/pcso-arrest-man-deported-10-times#ixzz2osqDZWNz


Bell, California --- http://en.wikipedia.org/wiki/Bell,_California

"Does Bell toll for excessive public pay? Controller's compensation database tells shocking story," by Steven Greenhut, UT San Diego, December 21. 2013 ---

. . .

Coincidentally, the controller’s update was released just as Angela Spaccia, former administrator in the scandal-plagued Los Angeles County city of Bell, was found guilty on 11 corruption charges that included the misappropriation of public funds. She was accused of creating a secret pension fund for herself and then-city manager Robert Rizzo, who at one point “earned” a salary of $800,000 a year plus benefits.

Rizzo — the rotund racehorse-owning poster child for municipal greed — previously pled “no contest” to corruption charges. Five other Bell officials were convicted, also. The scandal, which erupted in 2010, sparked a widespread debate about public pay levels and oversight. Trial evidence included an email string where officials joked about getting “fat together” and “taking all of Bell’s money.”

In fact, Controller John Chiang created this statewide compensation Website, based on data provided by cities and agencies, in direct response to Bell. The database has been widely praised as thorough and easy to navigate. But as scary as the information it provides may be, it may even understate the problem.

Its municipality pay averages “are in orders of magnitude too low,” argued Steve Frates, director of research at Pepperdine University’s Davenport Institute. That’s because it includes part-time and occasional workers in the average. Furthermore, the database doesn’t include other benefits public employees receive. It only calculates the direct costs of pensions and medical-care benefits — not the tens of billions of dollars in unfunded liabilities.

Chiang says that public disclosure of compensation information is the first step toward reform. Critics complain, however, about a lack of follow-up steps from other state officials. “The illegality, the excesses of Bell, are an aberration of the real problem,” said Richard Rider, president of San Diego Tax Fighters. “The most powerful force in local politics are the public-sector unions. They elect people who are most compliant. The result is what you would expect.”

The public has seen only modest reform. Gov. Jerry Brown and legislative leaders were concerned last year that their tax-increasing ballot measure (Proposition 30) was in trouble because the public didn’t trust that they would spend new dollars wisely. So they cobbled together a tepid pension-reform measure that mostly pares back excesses for new employees. That was it from the state.

Some localities, including San Diego and San Jose, passed pension reform measures last year. Bankruptcy forced Stockton to pull its far-above-average compensation levels down to the state average. But nothing fundamental has changed in California.

Now that the Legislative Analyst’s Office is predicting years of budget surpluses (provided the economy recovers and legislators control their spending), any hope of compensation reform from the Capitol is dim. Reform efforts have thrived only when it seemed as if the state was running out of cash.

On the hopeful front, San Jose Mayor Chuck Reed, a Democrat, is championing a 2014 statewide initiative that would allow cities to cut future benefits for current employees. Union activists are portraying that as an attempt to “eliminate” pensions, which clearly isn’t the case. But that measure could spark the next public-employee compensation battle. Reed recently argued that union-driven overpayment for police leads to higher crime because cities don’t have money left to hire additional officers.

Supporters of Reed’s effort are bolstered by a new Field Poll that reveals plummeting public support for labor unions, as a plurality (45 percent) of Californians say they do more harm than good. And despite the “no reform” approach in Sacramento, more troubling numbers trickle out — even from unlikely sources.

Treasurer Bill Lockyer, a union ally, told a small group in Thousand Oaks this month that the California State Teachers' Retirement System (CalSTRS) is in “crisis mode” and that “there will be a ratcheting down of retirement promises and commitments.” He did, however, defend the condition of the larger California Public Employees' Retirement System (CalPERS).

Sound or not, the list of those who receive pensions of $100,000 or more from CalPERS now tops 12,000 and is growing by about 40 percent each year. There’s plenty of accessible information, from the controller and elsewhere, suggesting that the public-employee compensation system is unsustainable and unfair. Union Watch reports that in struggling Desert Hot Springs the average city worker actually receives an all-included package of $144,000 a year and the average police and fire employee receives $164,000.

Increasingly, the public may be seeing that the problem isn’t a handful of officials who illegally gamed the system, but a system that — as Voltaire understood — allows a powerful minority to legally game the majority

Having paid off bond holders for one penny on the dollar, what fool would loan it another dollar to pay its bloated unfunded pensions?

"California City’s Return to Solvency, With Pension Problem Unsolved," by Rick Lyman and Mary Williams Walsh, The New York Times, December 3, 2013 ---

Before Detroit filed for bankruptcy, there was Stockton.

Battered by a collapse in real estate prices, a spike in pension and retiree health care costs, and unmanageable debt, this struggling city in the Central Valley has labored for months to find a way out of Chapter 9. Now having renegotiated its debt with most creditors, cobbled together layoffs and service cuts and raised the sales tax to 9 percent from 8.25 percent, Stockton is nearly ready to leave court protection.

But what Stockton, along with pretty much every other city in California that has gone into bankruptcy in recent years, has not done is address the skyrocketing public pensions that are at the heart of many of these cases.

“No city wants to take on the state pension system by itself,” said Stockton’s new mayor, Anthony Silva, referring to the California Public Employees’ Retirement System, or Calpers. “Every city thinks some other city will take care of it.”

While a federal bankruptcy judge ruled this week that Detroit could reduce public pensions to help shed its debts, Stockton has become an experiment of whether a municipality can successfully come out of bankruptcy and stabilize its finances without touching pensions. It is an effort that has come at great cost to city services and one that some critics say will simply not work once the city starts trying to restore services and hire 120 police officers it promised to get the sales-tax increase passed.

“They wanted to get out of bankruptcy in the worst possible way, and that’s just what they did,” said Dean Andal of the San Joaquin County Taxpayers Association, which fought the sales-tax increase. “If they go ahead and hire those new police officers, the city will be back in insolvency in four years.”

Stockton declared fiscal emergencies in 2010 and 2011, giving it the power to renege on annual pay increases for city workers. City services were slashed. Hundreds of municipal workers were laid off. And many retirees who had been promised health coverage for life learned that they would have to begin paying for it.

“That was the hardest part,” Councilman Elbert Holman said, “looking people in the eye and telling them sorry, you are losing your health care, but it’s absolutely necessary.”

By the time the judge found Stockton eligible for Chapter 9 bankruptcy on April 1, the city had about $147 million in unfunded pension obligations and about $250 million in debt from various bond issues.

The years of fiscal emergency and bankruptcy have left their mark, including a skyrocketing crime rate, which city officials and many residents attribute to staffing and service cuts in the Police Department.

“I suddenly realized a few years ago that, just in my tiny, two-block neighborhood, there had been 11 residential burglaries in the previous nine months,” said Marci Walker, an emergency room nurse.

Cities go bankrupt for many reasons: a collapse in real estate prices, a spike in pension and retiree health care costs, a burden of debt from expensive city projects. Stockton has experienced all three.

When real estate prices shot up in Silicon Valley in the last decade, many commuters decided that Stockton’s cheaper housing was worth the long commute to the Bay Area. That drove up local housing prices, so when the bubble burst it had a bigger impact, giving Stockton one of the nation’s highest foreclosure rates.

City leaders had also gone on a construction spree during the flush years, building a new sports arena, a minor-league baseball stadium and a marina. Citizens still bitterly mention the 2006 concert that opened the arena, where Neil Diamond was paid $1 million to perform.

And through it all, the pension costs for city workers — particularly for police officers and firefighters, who can retire early and draw on those pensions for decades — kept going up.

No part of the city has been left unscathed. Ms. Walker’s comfortable neighborhood near the University of the Pacific campus was hit with rising crime almost immediately after the police layoffs. “When the economy got bad and we lost police officers, it all started,” she said.

So she started the Regent Street Neighborhood Watch, the first of more than 100 such organizations to sprout up in the city in the last few years.

“We don’t confront anybody, we just let them know that we know they’re there,” Ms. Walker said. She added, “Criminals do not like eyeballs on them.”

Continued in article

Jensen Comment
Off the cuff Governor Brown complained that California has to deal with a trillion dollars in unfunded pensions (he may have exaggerated). The sad ttruth is that many of these were fraudulent pensions with criminal amounts (e.g., the pensions of Bell, California) and absurd early retirement provisions at age 50 or earlier.

City of Bell Scandal --- http://en.wikipedia.org/wiki/City_of_Bell_scandal

Before the Stockton declaration of bankruptcy there was the 2008 bankruptcy of Vallejo where the bankruptcy judge screwed bondholders but not pensioners.. Detroit's pensioners may not go unscathed, but the pattern of favoritism of pensioners over bond holders will eventually hurt cities that rob Peter Bondholder to pay Paul Pensioner.

"Why Investors Are Fleeing Muni Bonds At Record Rates," by Wolf Richter, Business Insider, December 16, 2013 ---

Municipal bond investors, a conservative bunch who want to avoid rollercoaster rides and cliffhangers, are getting frazzled. And they’re bailing out of muni bond funds at record rate, while they still can without losing their shirts. So far this year, they have yanked out $52.8 billion. In the third quarter alone, as yields were soaring on the Fed’s taper cacophony and as bond values were swooning, net outflows from muni funds reached $32 billion, which according to Thomson Reuters, was more than during any whole year.

Muni investors have a lot to be frazzled about. Municipal bonds used to be considered a safe investment – though that may have been propaganda more than anything else. Munis are exempt from federal income taxes, hence their attractiveness to conservative investors in high tax brackets. Munis packaged into bond funds appealed to those looking for a convenient way to spread the risk over numerous municipalities and states. While the Fed was repressing rates, muni bond funds were great deals.

Then came the bankruptcies.

The precursor was Vallejo, CA, a Bay Area city of 115,000 that filed for Chapter 9 bankruptcy protection in 2008 and emerged two years ago. But it’s already struggling again with soaring pension costs that had been left untouched. Jefferson County, which includes Alabama’s largest city, Birmingham, filed in 2011 when it defaulted on $3.1 billion in sewer bonds, the largest municipal bankruptcy at the time [but it’s already issuing new bonds; read....Municipal Bankruptcy? Why Not! And so The Floodgates Open].

Stockton, CA, filed in June 2012. Mammoth Lakes, CA, filed in July 2012. San Bernardino, CA, filed in August 2012. They were dropping like flies in the “Golden State.” Detroit filed in July this year, crushing all prior records with its debt of up to $20 billion. That’s $28,000 per person for its population of 700,000.

But Detroit is just a fraction of what is skittering toward muni investors: the Commonwealth of Puerto Rico. The poverty rate is 45.6%Unemployment is 14.7%. The economy has been in recession since 2006. The labor force has shrunk 16% from 1.42 million in 2007 to 1.19 million in October. The number of working people, over the same period, has plunged from 1.8 million to 1.1 million, a breathtaking 39%.

Puerto Rico had a good run for decades as federal tax breaks lured Corporate America to set up shop there. But when these tax breaks were phased out by 2005, the companies went in search for the greener grass elsewhere. To keep splurging, the government embarked on a borrowing binge that left the now lovingly named “Greece of the Caribbean” with nearly $70 billion in debt.

That’s 70% of GDP, and for its population of 3.67 million, about $19,000 per capita, or about $64,000 per working person. And then there is the underfunded pension system. But unlike Detroit, Puerto Rico is struggling to address its problems with unpopular measures, raising all manner of taxes and cutting outlays. Not even the bloated government payrolls have been spared. Too little, too late? Given the enormous poverty rate and long-term shrinking employment, what are the chances that this debt will blow up?

Pretty good, according to Moody’s Investors Service. Last week, it put $52 billion of Puerto Rico’s debt under review for a downgrade – to junk. Moody’s litany of factors: “Failure to access the public debt market with a long-term borrowing, declines in liquidity, financial underperformance in coming months, economic indicators in coming months that point to a further downturn in the economy, inability of government to achieve needed reform of the Teachers’ Retirement System.” This followed a similar move by Fitch Ratings in November.

Alas, Puerto Rico has swaps and debt covenants with collateral and acceleration provisions that kick in when one of the three major credit ratings agencies issues the threatened downgrade. Which “could result in liquidity demands of up to $1 billion,” explained Moody’s analyst Lisa Heller. It would “significantly narrow remaining net liquid assets.”

Now Puerto Rico is under pressure to show that over the next three months or so it can still access the bond markets at a reasonable rate. If not....

Puerto Rico’s debt was a muni bond fund favorite because it’s exempt from state and federal taxes. Now fears of a default on $52 billion or more in debt are cascading through the $3.7 trillion muni market. But Puerto Rico isn’t alone. Numerous municipalities and some states have ventured out on thinner and thinner ice.

Default risks are dark clouds on the distant horizon or remain unimaginable beyond the horizon. And hopes that disaster can be averted by a miracle still rule the day. However, the Fed’s taper cacophony is here and now, and though the Fed is still printing money and buying paper at full speed, the possibility that it might not always do so hangs like a malodorous emanation in the air.

Continued in article

Bob Jensen's threads on pension accounting ---

"Retired teachers file first lawsuit against Illinois pension reform law," by Rick Pearson, Chicago Tribune, December 28, 2013 ---

The Illinois Retired Teachers Association filed suit Friday challenging the constitutionality of the state’s historic but controversial plan to deal with the nation’s most underfunded public employee pension system.

The lawsuit is the first of what could be many filed on behalf of state workers, university employees, lawmakers and teachers outside Chicago. The legal challenge argues the law, which limits cost-of-living increases, raises retirement ages for many current workers and caps the amount of salaries eligible for retirement benefits, violates the state Constitution.

The lawsuit, filed in Cook County Circuit Court on behalf of eight non-union retirees, teachers and superintendents who are members of the state’s Teacher Retirement System, contended the constitutional “guarantee on which so many relied has been violated.”

“Countless careers, retirements, personal investments and medical treatments have been planned in justifiable reliance not only on the promises that were made in collective bargaining agreements and the Illinois Pension Code, but also on the guarantee of the (state constitution’s) Pension Protection Clause,” the lawsuit said.

But a spokeswoman for Democratic Gov. Pat Quinn, who signed the pension changes into law this month after years of political stalemate, said that just as a lawsuit had been expected, the administration “(expects) this landmark reform will be upheld as constitutional.”

At issue is a provision of the 1970 Illinois Constitution which states that public pensions represent“an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

The new law, however, scales back what had been annual 3 percent compounded cost-of-living increases to retirees. Instead, retirees would get 3 percent, non-compounding yearly bumps based on a formula that takes into account their years of service multiplied by $1,000. The $1,000 factor would be increased by the rate of inflation each year.

The measure also requires many current workers to skip up to five annual cost-of-living pension increases when they retire. For current workers, it also would boost the retirement age by up to five years, depending on how old they are.

In an attempt to make the new law constitutional by offering workers and retirees some trade offs, under a legal theory known as “consideration,” current workers would pay 1 percentage point less toward their pensions. In addition, pension systems could sue to force the state to pay its required employer share toward retirement and a limited number of workers could join a 401(k)-style defined contribution plan.

But the lawsuit contended the constitutional “guarantee, perhaps more so than anything else in the Illinois Constitution, was used by countless families across Illinois to plan careers, retirements and financial futures.”

It argues the state Supreme Court has consistently struck down attempts to change the state’s pension laws when benefits are diminished and that justices have warned that constitutional requirements cannot be suspended for economic reasons. Illinois state government’s shaky finances were the prime reason that after years of inaction, lawmakers this month passed the law in an attempt to deal with a $100 billion unfunded public pension liability. About 20 cents of every dollar paid in state taxes goes to fund public pensions and the amount was increasingly taking money away from education and other social services. Backers have said the new law could save an estimated $160 billion over the next 30 years.

At the same time, Illinois government’s inability to deal with the growing pension liability resulted in downgrades of the state’s credit rating, which boosted taxpayers’ borrowing costs for public works projects. Credit rating agencies heralded the new law, but also recognized that it would be challenged in court.

“We believe the new law is as constitutionally sound as it is urgently needed to resolve the state's pension crisis,” Quinn spokeswoman Brooke Anderson said in a statement.

“This historic law squarely addresses the most pressing fiscal crisis of our time by eliminating the state's unfunded pension debt, a standard set by the governor two years ago. It will ensure retirement security for those who have faithfully contributed to the pension systems, end the squeeze on critical education and human services and support economic growth,” she said.

Representatives of the “We Are One” coalition of public employee unions, including the state’s two major teachers’ unions, have said they expect to file suit after the New Year. Their lawsuit is expected to be filed outside of Cook County — in part reflecting a concern that powerful Democratic House Speaker Michael Madigan plays a powerful political interest in determining judgeships in the Chicago area.

Continued in article

Bob Jensen's threads on pension accounting and pension reforms are at

"Illinois's Fake Pension Fix:  The most dysfunctional state government lives down to its reputation," The Wall Street Journal, December 2, 2013 ---

Democrats in Illinois have dug a $100 billion pension hole, and now they want Republicans to rescue them by voting for a plan that would merely delay the fiscal reckoning while helping to re-elect Governor Pat Quinn. The cuckolded GOP seems happy to oblige on this quarter-baked reform.

Legislative leaders plan to vote Tuesday on a bill that Mr. Quinn hails as a great achievement. But the plan merely tinkers around the edges to save a fanciful $155 billion over 30 years, shaves the state's unfunded liability by at most 20%, and does nothing for Chicago's $20 billion pension hole.

Most of the putative savings would come from trimming benefits for younger workers. The retirement age for current workers would increase on a graduated scale by four months for 45-year-olds to five years for those 30 and under. Teachers now in their 20s would have to wait until the ripe, old age of 60 to retire, but they'd still draw pensions worth 75% of their final salary.

Salaries for calculating pensions would also be capped at $109,971, which would increase over time with inflation. Yet Democrats cracked this ceiling by grandfathering in pensions for workers whose salaries currently top or will exceed the cap due to raises in collective-bargaining agreements.

Democrats are also offering defined-contribution plans as a sop to Republicans who are desperate to dress up this turkey of a deal. These plans would only be available to 5% of workers hired before 2011. Why only 5%? Because if too many workers opt out of the traditional pension, there might not be enough new workers to fund the overpromises Democrats have made to current pensioners.

At private companies, such 401(k)-style plans are private property that workers keep if they move to a new job. But the Illinois version gives the state control over the new defined-contribution plans and lets the legislature raid the individual accounts at anytime. That's a scam, not a reform.

Even under the most optimistic forecasts, these nips and tucks would only slim the state's pension liability down to $80 billion—which is where it was after Governor Quinn signed de minimis fixes in spring 2010 to get him past that year's election.

Safely elected in January 2011, Democrats then raised the state's 3% flat income tax rate to 5% and its corporate rate from 7.3% to 9.5%, the fourth highest in the country. All $7 billion a year in new revenues have gone to pension payments, which will leave a huge new hole in the budget when the supposedly temporary tax hikes are phased out in 2015.

The truth is that Democrats will never let the tax increases expire, and state Senate President John Cullerton all but admitted as much in October. Mr. Quinn won't rule out another tax hike, which means round two is a certainty in 2015 if he wins re-election next year. The difference is that this time Democrats will kill the flat income tax and impose a progressive rate scheme that will make future tax hikes politically easier.

It's a sign of their desperation that the state's business lobbies are supporting the reform as the best they can hope for. Others want special tax breaks to offset the 2011 tax hike. Archer Daniels Midland ADM +1.49% (Decatur) and Office Max (Naperville) have threatened to move their corporate headquarters if the state doesn't guarantee $75 million in tax breaks. But Mr. Quinn has refused to approve more gifts for the legislature's corporate cronies until lawmakers pass something on pensions.

Democrats hold comfortable majorities in the legislature and don't need GOP votes. Yet they are demanding Republican support so they won't be the only targets of union wrath. Mr. Quinn watered down the reforms to reduce opposition from the teachers and other government unions, but the unions are still promising to go to court to block the changes if they pass.

GOP leaders who are rounding up votes must be feeling especially charitable this holiday season because they're making an in-kind contribution to Mr. Quinn, who will claim a bipartisan victory as he runs for re-election. While GOP gubernatorial candidate Bruce Rauner has denounced the pension legislation as window-dressing, his Republican primary challengers aren't as savvy. State Senator Bill Brady, who lost to Mr. Quinn in 2010, is supporting the bill while treasurer Dan Rutherford says it is too hard on unions. Such me-too thinking is why the Illinois GOP has become a useless minority.

Continued in article

"Audit reveals half of people enrolled in Illinois Medicaid program not eligible," by Craig Cheatham, KMOV Television, November 4, 2013 ---

Bob Jensen's threads on pension accounting and pension reforms are at

Why it's so hard to prevent fraud in welfare and food stamps:  Laws are written to prevent rule enforcement
"The Welfare Queen:  Ronald Reagan made Linda Taylor a notorious American villain. Her other sins were far worse.," by Josh Levin, Slate, December 19, 2013 ---

. . .

As of 1976, Taylor had yet to be convicted of anything. She was facing charges that she’d bilked the government out of $8,000 using four aliases. When the welfare queen stood trial the next year, reporters packed the courtroom. Rather than try to win sympathy, Taylor seemed to enjoy playing the scofflaw. As witnesses described her brazen pilfering from public coffers, she remained impassive, an unrepentant defendant bedecked in expensive clothes and oversize hats.

Linda Taylor, the haughty thief who drove her Cadillac to the public aid office, was the embodiment of a pernicious stereotype. With her story, Reagan marked millions of America’s poorest people as potential scoundrels and fostered the belief that welfare fraud was a nationwide epidemic that needed to be stamped out. This image of grand and rampant welfare fraud allowed Reagan to sell voters on his cuts to public assistance spending. The “welfare queen” became a convenient villain, a woman everyone could hate. She was a lazy black con artist, unashamed of cadging the money that honest folks worked so hard to earn.

After her welfare fraud trial in 1977, Taylor went to prison, and the newspapers moved on to covering the next outlandish villain. When her sentence was up, she changed her name and left Chicago, and the cops who had pursued her in Illinois lost track of her whereabouts. None of the police officers I talked to knew whether she was still alive.

When I set out in search of Linda Taylor, I hoped to find the real story of the woman who played such an outsize role in American politics—who she was, where she came from, and what her life was like before and after she became the national symbol of unearned prosperity. What I found was a woman who destroyed lives, someone far more depraved than even Ronald Reagan could have imagined. In the 1970s alone, Taylor was investigated for homicide, kidnapping, and baby trafficking. The detective who tried desperately to put her away believes she’s responsible for one of Chicago’s most legendary crimes, one that remains unsolved to this day. Welfare fraud was likely the least of the welfare queen’s offenses.

. . .

Taylor’s welfare fraud case stalled in the courts for long enough that her 1974 indictment remained campaign fodder for Ronald Reagan in 1976. The yawning chasm between “probable” and “indictable” was wide enough for Reagan to label Linda Taylor a public scourge, and for the candidate’s critics to claim she was a media myth. In October 1976, Reagan—who had lost that year’s GOP nomination to Gerald Ford—devoted one of his regular radio commentaries to updating the story of the “welfare queen, as she’s now called.” (While I haven’t found any examples of him saying “welfare queen” on the stump in 1976, he did use the term in this radio address.) According to Reagan, it had now been revealed that this woman (he still didn’t identify her by name) had operated in 14 states using 127 names, claimed to be the mother of 14 children, was using 50 addresses “in Chicago alone,” and had posed as an open heart surgeon. She also had “three new cars, a full-length mink coat, and her take is estimated at a million dollars.”


Judge Rules $15 Minimum Wage Hike Doesn't Apply To Seattle Airport Workers ---
These workers were the main target of the selective hike in wages.

Why did the stock markets surge on the "tapering news" from the Federal Reserve when such news should have lowered the market prices?

The tapering was minimal along with assurances that serious tapering will happen only after impossible conditions are met. Like death and taxes, quantitative easing will forever keep interest rates low and allow the government to print money to pay its bills.

"In One Sentence, Here's Why The Market Surged On Today's 'Taper'," by Joe Weisenthal, Business Insider, December 18, 2013 ---

"A Spoonful of Sugar," by Peter Schif," Townhall, December 24, 2013 ---

The press has framed Ben Bernanke's valedictory press conference last week in heroic terms. It's as if a veteran quarterback engineered a stunning come-from-behind drive in his final game, and graciously bowed out of the game with the ball sitting on the opponent's one-yard line. In reality, Bernanke has merely completed a five-yard pass from his own end zone, and has left Janet Yellen to come off the bench down by three touchdowns, with no credible deep threats, and very little time left on the clock.

. . .

There can be little doubt that the Fed's announcement was an achievement in rhetorical audacity. In essence, they told us that they would be tightening monetary policy by loosening monetary policy. Surprisingly, the markets swallowed it. I believe the Fed was forced into this exercise in rabbit-pulling because it understood far better than Wall Street cheerleaders that the economy, despite the soaring gains in stocks and real estate, remains dependent on continued stimulus. In my opinion, the seemingly positive economic signs of the past few months are simply the statistical signature of QE itself. Even Friday's upward revision to third-quarter GDP resulted largely from gains in consumer spending on gasoline and medical bills. Another major driver was increased business inventories fueled perhaps by expectations that QE supplied cheap credit (and the wealth effect of rising asset prices) will continue to encourage consumer spending.

But to many observers, the increasingly optimistic economic headlines we have seen over recent months have not squared with the highly accommodative monetary policy, making the arguments in favor of continued QE untenable. Even taking the taper into account, the Fed is still pursuing a more stimulative policy than it had at the depths of any prior recession. As a result, as far as the headline-grabbing taper decision, the Fed's hands were essentially tied. But they decided to coat this seemingly bitter pill in an extremely large dollop of honey.

More important than the taper "surprise" was the unusually dovish language that accompanied it. More than it has in any other prior communications, the Fed is now telling the markets that interest rates - its main monetary tool - will remain far more accommodative, for far longer, than anyone previously believed. Abandoning prior commitments to raise rates once unemployment had fallen below 6.5%, the new statement reads that the Fed will keep rates at zero until "well after" the unemployment rate has fallen below that level. No one really knows what the new target unemployment level is, and that is just the way the Fed wants it. On this score, the Fed has not simply moving the goalposts, but has completely dismantled them. With such amorphous language in place, they appear to be hoping that they will never have to face a day of reckoning. This is a similar strategy to that of the legislators on Capitol Hill who want to pretend that America will never have to pay down its debt.

At his press conference Bernanke went beyond the language in the statement by hinting that we should expect consistently paced, similarly sized reductions through much of the year, and that he expects that QE will be fully wound down by the end of 2014. The outgoing Chairman may be writing a check that his successor can't cash. He also made statements about how monetary policy needs to compensate for "too tight" fiscal policy that is being delivered by the Administration and Capitol Hill. Does the chairman believe that $600 billion annual deficits are simply not enough... even with our supposedly robust recovery? By the time President Obama leaves office, the national debt may well have doubled in size, and he will have added more to the total of all of his predecessors from George Washington through the first five months of George W. Bush's administration combined! How can Bernanke possibly say that our economic problems result from deficits being too small?

It's easy to forget in the current euphoria that a majority of market watchers had predicted that the first taper announcement would be made by Janet Yellen in March of 2014. But perhaps with a nod toward his own posterity, Ben Bernanke may have been spurred to do something to restrain his Frankenstein creation before he finally left the lab. But no matter who pulled the trigger first, this initial $10 billion reduction in monthly purchases has convinced many that the QE program will soon become a thing of the past.

But without QE to support the markets, in my opinion, the US economy will likely slow significantly, and the stock and real estate markets will most likely turn sharply downward. [To understand why, pick up a copy of the just-released Collector's Edition of my illustrated intro to economics, How An Economy Grows And Why It Crashes.] If the economic data begins to disappoint, I believe that Janet Yellen, who is much more likely to be concerned with full employment than with price stability, will quickly reverse course and increase the size of the Fed's monthly purchases. In fact, last week's Fed statement was careful to avoid any commitments to additional tapering in the future, merely saying that further changes will be data dependent. This means that tapering could stall at $75 billion per month, or it could get smaller, or larger. In other words, Yellen's hands could not be any freer. If the additional cuts never materialize as expected, look for the Fed to keep the markets convinced that the QE program is in its final chapters. These "Open Mouth Operations" will likely represent the primary tool in the Fed's arsenal.

Despite the slight decrease in the pace of asset accumulation, I believe that the Fed's balance sheet will continue to swell alarmingly. As the amount of bonds on their books surpasses the $4 trillion threshold, market watchers need to dispel illusions that the Fed will actually shrink its balance sheet, or even halt its growth. Already fears of such moves have pushed up yields on 10-year Treasuries to multi-year highs. Any actual tightening could push them significantly higher.

We have much higher leverage than what would be expected in a healthy economy, and as a result, the gains in stocks, bonds, and real estate are highly susceptible to rate spikes. If yields move much higher, I feel that the Fed will have to intervene to bring them back down. In other words, the Fed will find it much harder to exit QE than it was to enter.

In the meantime, the Fed's open-ended commitment to keep rates at zero, despite the apparent recovery, should provide an important clue as to what is really happening. We simply have so much debt that zero is the most we can afford to pay. The problem, of course, is that the longer the Fed waits to raise rates, the more deeply indebted we become. As this mountain of debt grows larger, so too does our need for rates to remain at zero. So if our overly indebted economy cannot afford higher rates now, or in the next year or two, how could we possibly afford them in the future when our total debt-to-GDP may be much larger?

As he left the stage from his final press conference, Ben Bernanke should have left a giant bottle of aspirin on the podium for his successor Janet Yellen. She's going to need it.


Bob Jensen's threads on the looming entitlements disasters ---

"A Historical View of ‘American Exceptionalism’: The 225 year journey of ‘American Exceptionalism: 1789 to 2014," by Steven Mintz, Ethics Sage, December 17, 2013 ---

Prostitution Freed From Legal Restrictions in Canada ---

Declaring laws restricting brothel-keeping, negotiating the terms of a sexual encounter, and living on the proceeds of prostitution to be unconstitutional, Chief Justice Beverley McLachlin wrote that such laws "infringe the … rights of prostitutes by depriving them of security of the person in a manner that is not in accordance with the principles of fundamental justice."

Continued in article

Jensen Comment
Johns from the USA should not rush to Canada just yet since the old laws are in effect for a year while the Canadian government appeals the ruling.

"Trial Lawyer Protection Act:  A new study shows that consumers lose in most class actions," The Wall Street Journal, December 23, 2013 ---

Trial lawyers market themselves as champions of the little guy against corporate America. So how's that working out for the little guy? Not so well, according to a new study by the Mayer Brown law firm for the Chamber of Commerce Institute for Legal Reform, which shows that in the vast majority of class actions, the class members end up empty-handed. In two-thirds of the resolved class actions studied, the class members didn't see a penny.

Out of 148 federal class actions reported by two major litigation publications in 2009, none of the cases went to trial and won a judgment for the plaintiffs. Zero. Fourteen percent of the cases remain pending. Of the 127 cases that had been resolved by September 2013, 35% were voluntarily dismissed by the plaintiff, 31% were dismissed on the merits by the court and 33% were settled.

Settlements are the real goal of plaintiffs lawyers, who know that many companies will cave to frivolous charges because they can't afford the legal bills and reputational damage from fighting a high-profile lawsuit. Lawyers profit handsomely from these agreements that give them a cut of the winnings off the top, but the odds for regular Joe Plaintiff aren't good. According to the study, only 33% of federal class actions settled compared with 67% for all federal cases.

It gets worse. Settlement details aren't always available, but in consumer class actions many class members don't collect their winnings at all and procedures to seek out class members and distribute the cash are rare. Mayer Brown says that "of the six cases in our data set for which settlement distribution data was public, five delivered funds to only miniscule percentages of the class: 0.000006%, 0.33%, 1.5%, 9.66%, and 12%."

The firm launched its study out of concern that an ongoing review of arbitration agreements by the new Consumer Financial Protection Bureau could be headed toward regulating or banning the agreements altogether. Under Dodd-Frank, the bureau has the authority to override the Federal Arbitration Act but it is required to do a study first. While it is studying—no extra credit for guessing the outcome—Minnesota Democrat Al Franken is pushing legislation that would effectively ban arbitration in all consumer and employment contracts.

While arbitration agreements are often an efficient way for consumers to settle claims with companies cheaply and quickly, liberals don't like anything that threatens the primacy of class actions. In its preliminary research released in early December on the use of arbitration agreements related to consumer financial products, the CFPB noted that nine out of 10 arbitration agreements allowed banks to keep consumers from joining class actions.

Considering the pitiful track record of class actions delivering for consumers, that's a good thing. The only beneficiaries of expanding the potential pool of class-action lawsuits are the plaintiffs attorneys—and their yacht-builders.

The 10 Most Ridiculous Lawsuits Of 2013 ---

The ten worst:

1. Idaho inmates' blamed a life of crime on alcohol companies.

A group of five inmates at a Kuna, Idaho prison facilities sued a group of eight brewers for failing to warn them adequately of the dangers of alcohol. 

“I have spent a great deal of time in prison because of situations that have arose because of people being drunk, or because of situations in which alcohol played a major role,” one inmate wrote, according to the Idaho Statesmen.

Others claim they never would have started drinking had they known about alcohol's addictive nature.

The inmates don't have a lawyer and drafted the suit themselves.

2. An Ohio teacher claimed fear of children in a suit against her district.

Maria C. Waltherr-Willard, 61, teaches Spanish and French at the Mariemont school district. She claims, however, to experience stress, anxiety, chest pains, vomiting, nightmares, and high blood pressure when she spends time around young children — a disability she calls "pedophobia," according to Fox News.

So she sued the district for discrimination for reassigning her from high school to middle school. A federal judge dismissed three of her six claims in January 2013.

3. A New Jersey school kicked a student off the track team for excessive absences, and his dad sued the county for $40 million.

The father claims a family death and leg injury can account for the absences, also that his freshman son was bullied and harassed before being kicked off the team, according to Yahoo! Sports.

The suit also claims the coach chose seniors over the boy for races despite him running faster times. 

4. A West Virginia woman sued over "severe and permanent injuries" despite completing a half-marathon.

Less than six months after her car accident, Erica Tamburin ran a half-marathon in 2010. She finished 50 out of 173, according to the West Virginia Record.

Claiming she suffered severe injuries, however, she filed suit the next year against Cabela's, the owner of the parking lot where her accident occurred.

Tamburin also listed her daughter, for allegedly losing the service and comfort of her mother, on the suit.

5. Two New Jersey men sued Subway because their "footlong" sandwiches fell short.

Earlier this year Australian Matt Corby measured his Subway sandwich. The sub, advertised as a "footlong," was only 11 inches long. The photo quickly went viral. 

Now, two New Jersey men have sued the company because their footlong sub sandwiches allegedly only hit 11 inches, too.

“The case is about holding companies to deliver what they’ve promised,” the duo's lawyer Stephen DeNittis told the New York Post.

A Manhattan shop owner also told the Post the company has decreased its cold-cut sizes by 25% recently. 

The case has since transferred to Federal Court at the request of the defendants. They also moved to seek class action status, according to the Burlington County Times

6. A grown man in New York sued his parents for their "indifference" to his problems.

Homeless Brooklyn resident Bernard Bey, 32, sued his parents because they refused to give him $200,000 to open up two Domino's pizza franchises, the New York Daily News reported. He thinks his parents should mortgage their Bed-Stuy home and give him one-eighth of the money.

Bey's parents' actions over the years "have caused deep rooted wounds that cannot heal on their own," the suit states. They "are indifferent to their children's problems, relationship, poverty, status and station in life."

7. A customer sued a Bob Evan's over a hostess' rude comment. 

When Joel Acey entered a Bob Evan's in West Virgina and asked to sit in the front of the restaurant, the hostess allegedly didn't listen.

He claims she led him to the back, slammed the menus on the table, and called him "a damned idiot," the West Virginia Record reported. 

Unsatisfied with the manager's apology, Acey sued the company for discrimination based on his race. 

8. A grad student who received free tuition sued her Pennsylvania school over a grade.

Megan Thode, a graduate student at Lehigh University, sued her school because she got a C+. Her attorney Richard J. Orloski claims the grade meant to force her out of becoming a licensed professional counselor, according to The Morning Call, Lehigh Valley's daily newspaper. 

The professor, however, spoke of unprofessional behavior, including swearing in class. 

Thode filed a civil suit totaling $1.3 million for a breach of contract and sexual discrimination. Notably, she attended the university for free since her dad is a professor.

A judge rejected her claim in February 2013, the Associated Press reported. 

9. An injured robber sued an Arizona shop owner.

Scott LaFonte allegedly took merchandise without paying from Mike's Mini Mart while brandishing a knife, according to Prescott, Ariz.'s The Daily Courier.

Store owner Michael Lewis took a gun from his car and chased after the robber, whom he knew. When LaFonte approached him, Lewis fired a warning shot in the air and then, as he continued to approach, shot him three times, according to a police report.

LaFonte sued Lewis in 2011, asking for unspecified damages, including lost wages and medical expenses, saying the store owner was not in danger and only fired out of "spite or ill will."

Two years later, a judge found Lewis not liable for damages.

10. A Tennessee man sued Apple for his porn addiction.

One day, former attorney and amateur model Chris Sevier accidentally typed "F---book," instead of "Facebook" on his Apple device.

Now, he's suing the tech giant for selling him a machine with unrestricted Internet access. Since Apple is "concerned with the welfare of our Nation's children, while furthering pro-American values" it should "sell all its devices in 'safe mode,' with software preset to filter out pornographic content," according to his suit. 

Sevier also claims that by giving access to porn at users' fingertips, Apple has harmed actual, brick and mortar adult stores, the Huffington Post reported. 

Bob Jensen's Fraud Updates are at

"A Decade of Decline in the American Dream Today's volatile mood is a reminder of the early post-Vietnam years," by William A. Galston, The Wall Street Journal, December 18, 2013 ---

As 2013 grinds to a dismal end, a spate of public opinion surveys paint a gloomy picture. The halting and uneven recovery from the Great Recession has left Americans discontented about the present and worried about the future. They do not believe that a decade of costly wars has yielded an adequate return on their investment of blood and treasure. By an overwhelming margin, the people believe that their country is on the wrong track.

In the weeks before the 2012 elections, according to the NBC News/Wall Street Journal Survey, Americans who expected the economy to improve during the next year outnumbered those who expected it to get worse, by a ratio of five to one. Today, according to several surveys, that burst of optimism has evaporated, with roughly as many people expecting decline as improvement. Whatever its actual long-term consequences, the government shutdown damaged public confidence: Nearly half the respondents in the NBC/WSJ survey think it inflicted a great deal or quite a bit of harm on the economy.

Americans doubt that the economy is measuring up to their principles. In a recent Bloomberg survey, 68% said that the gap between the rich and everyone else is getting bigger, and 64% said that individuals do not have an equal chance of getting ahead. Sixty-four percent agreed with Pope Francis that government leaders should pay more attention to income inequality. When asked what should be done, however, the respondents split down the middle: 45% thought that government should implement policies to shrink the gap, while 46% said that it would be better for government to stand aside and let the market operate freely.

Turning overseas, the Pew Research center's 2013 survey of America's place in the world portrays a worried, risk-averse people. Fifty-three percent say that the U.S. is less important and powerful globally than it was 10 years ago—the first majority to take that position in four decades of surveys. (Even during the dark days after our withdrawal from Vietnam, only 41% thought that our power and importance had declined.) Seventy percent say that the U.S. is less respected than it once was, and 51% say that we do too much to help solve world problems, versus 17% who think we do too little. Only 31% believe that our prolonged combat engagement in Afghanistan has made us safer from terrorism.

Not surprisingly, 52% of all Americans assert that the U.S. should "mind its own business internationally and let other countries get along the best they can on their own"—the most lopsided endorsement of that proposition since the question was first posed a half century ago. Fully 80% want us to concentrate more on our own domestic problems and to build prosperity at home.

None of this means that overseas concerns have disappeared. Americans worry about the Iranian and North Korean nuclear programs, Islamist extremism, and cyberattacks from abroad. About 68% continue to regard the U.S. as the world's leading military power, and 56% want to keep it that way. But Americans want their country to use that power for purely defensive domestic purposes. They are not much interested in classic international goals such as promoting human rights and democracy or improving living standards in developing countries. For the moment, anyway, they endorse John Quincy Adams's vision of an America that "goes not abroad in search of monsters to destroy."

The years since 9/11 have taken a toll on the American dream. A survey by the bipartisan group No Labels (full disclosure: I am a co-founder) finds that only 38% of people think America's best days are ahead of us, versus 48% who think that time is behind us. Only 26% believe that the next generation of Americans will be better off than this generation and fully 62% believe the coming generation will be worse off. And that generation may be coming to agree. The most recent survey by Harvard's Institute of Politics indicates, for the first time, majority disapproval of the president's job performance among young adults.

Continued in article

"The Unionization-Inflation Connection,"  Harvard Business Review Blog, December 27, 2013 ---

In a study of inflation peaks that preceded monetary-policy adjustments in 21 nations between 1974 and 2004, Tony Caporale of the University of Dayton found that higher peaks were linked with higher levels of unionization. Specifically, a 1-standard-deviation increase in the percentage of public and private employees who were members of unions was associated with an 8.5% higher inflation rate at the peak before monetary adjustment. High levels of unionization can lead to wage inflexibility, which can contribute to consumer price increases.

"Belgium shut to new citizens in 2013," BBC, December 17, 2013 ---

Not a single foreigner has yet been naturalised in Belgium under a law that came into force on 1 January 2013, it appears.

The new rules require applicants to "have shown, or be able to show, outstanding services to Belgium" in fields such as science, sport or culture. "The effects of the new nationality law are significant," says the daily La Libre Belgique. In 2013, apparently not a single one of the 508 requests put to the lower house of parliament by 30 November is expected to be granted.

The change in the law seems to have stopped many from applying in the first place - thousands of applicants were successful under the old rules in 2012 alone.

Senior MP Georges Dallemagne predicts that, once the backlog of old applications has been cleared, there will be no more than "two or three" naturalisations a month. And that's a good thing, he says. "It's not for MPs to examine tens of thousands of naturalisation requests every year apart from a few exceptions where the person can contribute to Belgium's standing in the world."

Continued in article

Jensen Question
I asked the following question on the Turbo Tax Forum Regarding Obamacare Questions:
I'm told that only income, not wealth, will be the deciding factor on eligibility for Medicaid beginning in 2014.
If I'm a full time student having zero income and $10 million trust fund of stock paying no dividends, will I be eligible for Medicaid?

A Turbo Tax expert says that wealth may still be a criterion in the states that rejected the Medicaid expansion. Having valuable assets is no longer a criterion in those states that yielded to Whitehouse pressure and temporary funding to expand Medicaid roles.

There are 24 states who are not expanding Medicaid and may, therefore, still deny Medicaid to millionaires. The other 26 states may now grant free health care to millionaires who strategically lock in their wealth for long-term growth and negligible current income ---

U.S. prosecutors have charged 49 current and former Russian diplomats and their family members with participating in a scheme to get health benefits intended for the poor by lying about their income . . . Meanwhile, according to the charges, the family members had their housing costs paid for by the Russian government and spent "tens of thousands of dollars" on vacations, jewelry and luxury goods from stores like Swarovski and Jimmy Choo.

The Scam Succeeded
All Russian Diplomats Charged in US Medicaid Fraud Case Have Returned Home
Neither the Russian government nor any of the fraudsters will repay a penny of the fraud.

Deloitte's Map of the Number of Healthcare Exchanges Estimated Per State ---
http://www.deloitte.com/assets/Dcom-UnitedStates/Local Assets/Documents/Health Plans/us_hp_hix_IndividualMarketCompetition_81313.pdf
For example, New Hampshire and West Virginia have one whereas Texas has 11, Wisconsin has 13, and New York has 16.
Each carrier does have multiple plans that vary largely on the size of the deductibles with bronze plans having 40% deductibles and silver having 30% deductibles. Prices vary in different states. Prices also vary with age and smoking.

There are differences even among states who are not providing their own exchanges. Currently there are 26 states who rely on Federally provided exchanges ---
Why does Maine have only two exchanges while Texas has 11 exchanges?

How to Mislead With Statistics and Graphs

If you were teaching statistics how could you use the following article to illustrate how to mislead with statistics?

"Obamacare Prices: Competition Lacking in Some Exchanges," by John Tozzi, Bloomberg Businessweek, December 19. 2013 ---

The drafters of the Affordable Care Act imagined vibrant marketplaces that would give consumers options from many insurers. So far, competition is limited: 40 percent of Americans live in counties with three or fewer companies selling Obamacare policies, leaving them more wireless carriers to choose from than health plans.


Jensen Comment
No matter how much we preach that correlation is not causation, journalists, students, and even professors fall into the same old trap of not digging deeper for causes rather than implying that correlation is synonymous with causation.

Yes premiums do seem to be correlated with competition. But how much is the competition really affecting price relative to underlying causal factors that affect such things as companies refusing to enter the competition?

Insurance companies themselves are not very forthcoming about why they avoid certain markets other than providing vague statements about those markets not being profitable. The bottom line is that I don't know why there is so little medical insurance competition in some parts of the country relative to other parts of the USA. But I would not be so naive to imply that lack of competition is a causal factor. Where there's lack of competition there are most likely either underlying barriers to entry or other factors that make medical insurance less profitable in those areas. Charging higher prices for insurance in those markets is a result of whatever factors are driving potential competitors out of those markets.

A skilled analyst would probe deeper as to why there is so little competition in come counties and states.

December 24 reply from the TurboTax Forum

Hello rjensen,

SweetieJean commented on an answer to your question: Why does the number of exchanges vary so greatly. For example, New Hampshire and West Virginia have only one exchange whereas New York has 16 exchanges and Texas has 11 exchanges?

Saw a recent article about someone who had only 1 insurance in their Exchange, but their across the street neighbor (who lived in a different zip code) had 15.  In very rural areas (NH, WV), there isn't enough of a customer population for most insurance companies to make a profit.


To view the comment, click (or copy and paste in your browser) the link below:



While the Affordable Care Act clearly benefits those at the low and high ends of the income scale, many middle-class Americans don’t qualify for health care subsidies, and are facing steep premium prices.
The New York Times
, December 21, 2013
Health Care Law Frustrates Many in the Middle Class, by Katie Thomas, Reed Abelson, and Jo Craven McGinty,

Ginger Chapman and her husband, Doug, are sitting on the health care cliff.

The cheapest insurance plan they can find through the new federal marketplace in New Hampshire will cost their family of four about $1,000 a month, 12 percent of their annual income of around $100,000 and more than they have ever paid before.

Even more striking, for the Chapmans, is this fact: If they made just a few thousand dollars less a year — below $94,200 — their costs would be cut in half, because a family like theirs could qualify for federal subsidies.

The Chapmans acknowledge that they are better off than many people, but they represent a little-understood reality of the Affordable Care Act. While the act clearly benefits those at the low end of the income scale — and rich people can continue to afford even the most generous plans — people like the Chapmans are caught in the uncomfortable middle: not poor enough for help, but not rich enough to be indifferent to cost.

“We are just right over that line,” said Ms. Chapman, who is 54 and does administrative work for a small wealth management firm. Because their plan is being canceled, she is looking for new coverage for her family, which includes Mr. Chapman, 55, a retired fireman who works on a friend’s farm, and her two sons. “That’s an insane amount of money,” she said of their new premium. “How are you supposed to pay that?”

An analysis by The New York Times shows the cost of premiums for people who just miss qualifying for subsidies varies widely across the country and rises rapidly for people in their 50s and 60s. In some places, prices can quickly approach 20 percent of a person’s income.

Experts consider health insurance unaffordable once it exceeds 10 percent of annual income. By that measure, a 50-year-old making $50,000 a year, or just above the qualifying limit for assistance, would find the cheapest available plan to be unaffordable in more than 170 counties around the country, ranging from Anchorage to Jackson, Miss.

A 60-year-old living in Polk County, in northwestern Wisconsin, and earning $50,000 a year, for example, would have to spend more than 19 percent of his income, or $9,801 annually, to buy one of the cheapest plans available there. A person earning $45,000 would qualify for subsidies and would pay about 5 percent of his income, or $2,228, for an inexpensive plan.

In Oklahoma City, a 60-year-old earning $50,000 could buy one of the cheapest plans for about 6.6 percent of his income, or about $3,279 a year with no subsidy. If he earned $45,000, with the benefit of a subsidy, he would spend about $2,425.

While the number of people who just miss qualifying for subsidies is unclear, many of them have made their frustration known, helping fuel criticism of the law in recent weeks. Like the Chapmans, hundreds of thousands of people have received notices that their existing plans are being canceled and that they must now pay more for new coverage.

In an effort to address that frustration, the Obama administration announced on Thursday that it would permit people whose plans had been canceled to buy bare-bones catastrophic plans, which are less expensive but offer minimal coverage. Those plans have always been available to people under 30 and to those who can prove that the least expensive plan in their area is not affordable. But the announcement does not address the concerns of those who would like to buy better coverage, yet find premiums in their area too expensive.

David Oscar, an insurance broker in New Jersey, another high-cost state, said many of his clients had been disappointed to learn that the premiums were much more expensive than they had expected.

“They’re frustrated,” he said. “Everybody was thinking that Obamacare was going to come in with more affordable rates. Well, they’re not more affordable.”

Many of the biggest provisions of the Affordable Care Act are aimed squarely at the poorest of Americans.

Many of the biggest provisions of the Affordable Care Act are aimed squarely at the poorest of Americans. Under the law, states have the option of expanding Medicaid to a larger pool of people with the lowest incomes. To those earning more, the law provides subsidies to people earning up to four times the federal poverty level, or $45,960 for an individual and $62,040 for a couple.

Ninety percent of the country’s uninsured population have incomes that fall below that level, according to one recent analysis. As a result, the subsidies “are well targeted for people who are uninsured or underinsured,” said Sara R. Collins, an executive with the Commonwealth Fund, a private foundation that finances health policy research. “That is really where the firepower of the law is focused.”

Continued in articl

Jensen Comment
Hello! It's like the progressive press is at last awakening to a fact that many of us knew all along. Not mentioned is that you must pay even more to choose your own hospital and doctors under the very high priced Cadillac plan options. Other insured people must deal with health care networks and are denied access to top hospitals and doctors (70% if California's physicians are boycotting the exchange insurance plans). The good news for those who lie about their incomes is that they will probably get away with having free Medicaid or subsidized higher priced premiums. ---

The Administration is refusing to release data on what proportion of the Obamacare sign ups are not receiving free medical care and medications under the expanded Medicaid or subsidized premiums with high deductibles. Did you ever wonder why?

It makes it likely that premiums will rise. And that more insurers (and health providers) will drop out of this market, and fewer will enter.
"New State Data On Obamacare Enrollment Trends Show How Scheme Is Failing," by Scott Gottlieb, Forbes, December 20, 2013 ---

The White House obfuscates when it comes to Obamacare enrollment results.

But some of the individual states that have established their own on-line exchanges (and sidestepped healthcare.gov) have been forthcoming.

Enrollment in these states is outpacing healthcare.gov. So it’s a good bet that their experience is a proxy of what’s happening market wide.

And these individual state numbers look awful.

The entire scheme was predicated on enticing enough young, healthy consumers to sign up for insurance to subsidize the cost of the older Americans, and those with pre-existing health conditions.

The state exchanges are badly missing these demographic marks.

The newest data comes from six states that have provided the most transparency around their enrollment figures.

Totaled together, it shows that, on average, 54% of those purchasing plans were between the ages of 45 and 64. These states are California, Colorado, Connecticut, Minnesota, Rhode Island, and Washington State.

Consumers are also paying up for “silver” plans by a wide margin (55% of enrollees, on average, have bought “silver” coverage). This makes them eligible for increased cost-sharing subsidies that will reduce out of pocket costs (assuming they are below 250% of the federal poverty level — about $60,000 in annual income for a family of four, or $30,000 for an individual. It’s at this income level where the special subsidies kick in).

Selecting a costlier silver plan (rather than the cheapest, bronze plans) is a smart choice if a consumer plans to actually tap their health coverage.

This heavy migration to “silver” plans is another indication that people signing up for Obamacare are a sicker group, on average. Younger, healthier beneficiaries were expected to be far more likely to choose bronze plans.

These numbers were analyzed in an excellent report published yesterday by the managed care equity analysts at investment bank Morgan Stanley.

Among the states, Colorado and Washington State had the lowest percentage of enrollments in the key 18-34 demographic, at just 18% of the 23,000 people who have enrolled in an Obamacare plan in Colorado (through Dec 14th) and 20,000 who have signed up in Washington State (through Nov 30th).

In California, those between 18-34 accounted for 21% of enrollees (through December 7th). In Rhode Island, that figure was 20% and in Minnesota, 23%.

Very few people are signing up for the cheapest, catastrophic plans that are being marketed to the so-called “young invincibles.”

These plans were created with the sole purpose of luring health, young consumers into Obamacare. (These are the plans that the Whit House just offered to extend to people who were kicked off of their individual insurance policies as a result of the Obamacare mandates).

In California, just 1% of enrollees chose these plans, in Connecticut 2%, and Rhode Island 1%. For other states, there were too few enrollees to get to 1%.

Most consumers who have signed up – about 85% on average — are eligible for subsidies because they fall below 400% of the Federal Poverty Level (about $90,000 in annual income for a family of four). And most of these folks are choosing silver plans.

Even more revealing are the choices being made by consumers who don’t qualify for subsidies. Almost 40% of these folks are selecting gold and platinum plans. Without the benefit of government subsidies, these plans are very pricey.

So who would be willing to pay up for this coverage?

Some are undoubtedly upper middle class and wealthy consumers who were thrown off their prior coverage once insurers cancelled their existing health plans in the individual market. They want the costlier coverage because, while the networks and formularies don’t improve over cheaper plans, the co-insurance often does.

But a healthy fraction of this cohort who are buying up to Gold are undoubtedly middle class folks who are paying more for better coverage because they have medical conditions, and know that they will need to access the healthcare services.

If you plan to consume a lot of healthcare, it makes sense to buy a platinum plan. That way, through the co-insurance that some of these plans offer, you can offload a bigger chunk of your medical costs as possible onto the government.

The bulk of those signing up for Obamacare will get some form of federal subsidies.

But among those who don’t qualify for subsidies, only 30% have selected the cheap bronze plans. These are likely the younger, healthier consumers that Obamacare needs in order to make its math work. And the scheme isn’t attracting these folks.

Finally, looking at the top line numbers, things don’t get much better.

In California, just 47% of those who have signed up have received a private health plan. The rest were put on Medicaid. (And remember, these figures only include those who have signed up, but not necessarily paid their first premium).

The figures for the rest of the states aren’t any better. In Colorado, just 17% got private coverage, with the other 83% put on Medicaid. In Connecticut, 61% got private coverage, in Minnesota, 71%, Rhode Island 33%, and Washington State 11%.

The weighted average across all the states shows that only 36% of those who have signed up (but not necessarily paid for) Obamacare, were put on private plans.

The rest have been added to the rolls of Medicaid.

When it comes to the data on Obamacare enrollment, the White House has been cooking their numbers. They are anxious to find the nuggets that can paint a pretty portrait. But the totality of the data doesn’t’ lie.

The top line trends are terrible. But it’s the demographic trends, buried in the Obamacare numbers, which should cause the administration the most concern.

But the effects will spill into 2015, as health plans set their rates based on their initial experience.

The bad start makes it more likely this entire scheme remains a niche market to service a mostly older, sicker, and less wealthy demographic.

It makes it likely that premiums will rise. And that more insurers will drop out of this market, and fewer will enter.

Continued in article

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

"Obamacare: Silence of the Insurers," by Jonah Goldberg, Townhall, December 18, 2013 ---

When will the insurers revolt?

It's a question that's popping up more and more. On the surface, the question answers itself. We're talking about pinstriped insurance company executives, not Hells Angels. One doesn't want to paint with too broad a brush, but if you were going to guess which vocations lend themselves least to revolutionary zeal, actuaries rank slightly behind embalmers.

Still, it's hard not to wonder how much more these people are willing to take. Even an obedient dog will bite if you kick it enough. Since Obamacare's passage, the administration has constantly moved the goalposts on the industry. For instance, when the small-business mandate proved problematic in an election year, the administration delayed it, putting its partisan political needs ahead of its own policy and the needs of the industry.

But the insurers kept their eyes on the prize: huge guaranteed profits stemming from the diktat of the health insurance mandate. When asked how he silenced opponents in the health industry during his successful effort to socialize medicine, Aneurin Bevan, creator of the British National Health Service, responded, "I stuffed their mouths with gold."

Hence, the insurers were ready on Oct. 1. They rejiggered their industry. They sent out millions of cancellation letters to customers whose plans no longer qualified under the new standards set by the Affordable Care Act. They told their customers to go to the exchanges to get their new plans.

But because President Obama promised Americans "if you like your health care plan, you can keep it," (PolitiFact's "Lie of the Year"), those cancellations became a political problem of Obama's own making.

In response, the president blamed it on the insurance companies or "bad apple" insurers. White House spokesman Jay Carney insisted that it was the insurance companies that unilaterally decided not to grandfather existing plans. (The Washington Post's "Fact Checker" columnist, Glenn Kessler, gave this claim "Three Pinocchios.")

Then, just last week, Health and Human Services Secretary Kathleen Sebelius announced that she was "urging" insurers to ignore both their contracts and the law and simply cover people on the honor system -- as if they were enrolled and paid up. She also wants doctors and hospitals to take patients, regardless of whether they are in a patients' insurance network or even if the patient is properly insured at all. Just go ahead and extend the deadline for paying, she urged insurers; we'll work out the paperwork later.

Of course, urging isn't forcing. But as Avik Roy of Forbes notes, the difference is subtle. Also last week, HHS also announced last week that it will consider compliance with its suggestions when determining which plans to allow on the exchanges next year. A request from HHS is like being asked a "favor" by the Godfather; compliance is less than voluntary.

The irony, as Christopher DeMuth recently noted in the Weekly Standard, is that if the architects of Obamacare had their way, the insurers would have been in even worse shape today. The original plan was for a "public option" that would have, over time, undercut the private insurance market to the point where single-payer seemed like the only rational way to go. If it weren't for then-Sen. Joe Lieberman's insistence that the provision be scrapped, DeMuth writes, "Obamacare's troubles would today be leading smoothly to the expansion of direct federal health insurance to pick up millions of canceled policies and undercut rate increases on terms no private firm could match."

In other words, the insurers knew the administration never had their best interests at heart but got in bed with it anyway.

Continued in article

Jensen Comment
Until recently the enthusiasm of medical insurance companies was understandable since the the losses for deductible portions of contracts were passed on mostly to patients themselves and possibly their doctors. Most medical service bad debts of for default of premium payments were passed on to hospitals and doctors.

Also the big and prosperous insurance companies were allowed to opt out of participating in the more risky health insurance exchanges. Most did opt out such that the government had to make loans for new exchange companies to to become insurers for individuals not covered by their employers. These exchanges are poorly capitalized, and many will probably have to be bailed out by the government if and when they encounter insolvency.

To get more heavily capitalized insurance companies to participate would require higher premium rates and more protection against bad debt losses. But this in turn would raise premiums dramatically and be counter to the whole purpose of Obamacare ---  to get more people insured and using more preventative care options. High premiums and low deductibles could destroy Obamacare by making more rather than fewer people insured.

The silence of the media on astute health care providers is more problematic.
Many of the biggest and best hospitals like the Andersen Cancer Center will not serve patients covered by the exchanges. Over 70% of California's physicians allegedly will not serve networks covered by the exchanges (except in the case where emergency treatment is called for).

Has any media source complained that with proper investment planning very wealthy people, especially college students on trust funds, may get free Medicaid medical care and medications.

Jensen Question
I asked the following question on the Turbo Tax Forum Regarding Obamacare Questions:
I'm told that only income, not wealth, will be the deciding factor on eligibility for Medicaid beginning in 2014.
If I'm a full time student having zero income and $10 million trust fund of stock paying no dividends, will I be eligible for Medicaid?

A Turbo Tax expert says that wealth may still be a criterion in the states that rejected the Medicaid expansion. Having valuable assets is no longer a criterion in those states that yielded to Whitehouse pressure and temporary funding to expand Medicaid roles.

I am honestly confused by the assertion that your wealth after 2014 will not affect your eligibility for Medicaid. In does not seem right that students on trust funds should be getting free medical care and medications.


"What 2014 means for Obamacare," by Sarah Kliff, The Washington Post, January 1, 2013 ---

. . .

The next Obamacare fight is going to be about access.
After three months of enrollment, January will be the first month when shoppers can see what they purchased. We know that the plans for sale on the marketplace tend to have relatively limited networks, as insurers restricted doctor access to hold down premium prices. New subscribers could find that a doctor they want isn't in network, and get frustrated. Co-payments may seem alarmingly high -- a byproduct of keeping premiums low. While the health-care system probably has the capacity to absorb a few million new insurance subscribers (for a variety of reasons explored here) there is still room for issues about access to specific doctors and the price tag that comes along with trips to the doctor's office.

Continued in article

Jensen Comment
While the new Medicaid patients will probably flood the hospital ERs instead of seeking out network physicians, the patients on plans requiring co-payments and deductibles will probably seek out physicians on their network plans. Hospital ERs tend to charge large co-payments which of course do not matter to Medicaid patients since they do not have to pay any co-payments.


In some instances physicians who are suing the ACA network insurers after being dropped by the networks
",MDs sue ObamaCare insurer over dropped doctors" by Geoff Earle, Fox News, December 28, 2013 ---

A group of New York doctors is suing insurance giant UnitedHealthcare, charging that it booted doctors from its network to avoid cost hikes imposed by ObamaCare.

The company’s decision to kick more than 2,000 docs from its Medicare Advantage network threatens to harm elderly and disabled patients, according to the filing in Brooklyn federal court.

“By terminating numerous physicians from the . . . network, United seeks to stem financial losses occasioned by reduced federal payments under the Affordable Care Act,” the suit launched by the Medical Society of the State of New York claims.

“This, of course, comes at the expense of physicians,” the suit continues, arguing that the company violated doctors’ contracts by failing to give sufficient notice, among other things.

Tugging at the heartstrings, the suit specifically mentions elderly and disabled patients “who must now either find new physicians (including traveling farther distances to find a participating . . . provider), switch plans to continue treatment with the terminated physicians, or pay significant additional out-of-pocket costs to continue treatment with an ‘out-of-network’ provider.”

It accuses United of “shifting the financial burdens imposed by the Affordable Care Act from itself, a multibillion-dollar company,” to providers and patients.

Medical Society President Sam Unterricht told The Post the company’s decision was unfair to patients, since they had to choose a new plan under Medicare Advantage, a private alternative to traditional Medicare, by Dec. 7, when company Web sites still showed doctors who were being kicked out of the network at the start of the new year.

“For some people who are medically fragile it can really be dangerous. There can be gaps in care,” he said.

Unterricht said reduced Medicare Advantage payments to physicians are being used as a cost-saving measure to fund ObamaCare. He said docs would get paid 20 percent or even 40 percent less per patient.

“A lot of doctors are not going to be able to accept that and really give good medical care at that kind of a price,” he said.

Continued in article

Jensen Comment
This is a reversal of the stories we are hearing about physicians boycotting the ACA networks.

We are seeing a bit about this up here. In their separate offices in our Littleton Regional Hospital three different medical network groups each dropped one of its MDs. Interestingly, all three of the dropped physicians at one time or another been general practitioners for my wife or me. The dropped MDs were all women MDs who were replaced by new and much cheaper Physician Assistants who are permitted, at least up here, to examine patients like a physician and write prescriptions.

One of the MDs, Dr. Virginia Jeffryes, after facing the huge expense of starting a new practice, was hired back by her network group but now has to commute to Whitefield. Dr. Kathleen Smith and Dr. Robin Hallquist are incurring the expenses of commencing new practices in Littlleton and Twin Mountain respectively. The startup expenses include renting office space, hiring medical and administrative staff, buying computers and other equipment,, going it alone for malpractice insurance premiums. Plus there is an enormous amount of red tape involved in getting permission to bill third parties like Medicare and Worker Comp.

I firmly believe these quality physicians were dropped by their respective medical network groups and replaced by Physician Assistants (PAs) and/or Osteopaths to save money. That, however, is only my opinion since I have no inside tracks to the accounting records.

One of the network groups retained a cheap and uncaring MD trained in another country. She needs and attitude adjustment. I'm told by a neighbor who works in the hospital that her patients are continually asking for another "doctor" be it a PA or an Osteopath.

Why didn't the group fire the lousy MD and retain the high quality MD? That's a no-brainer question for a managerial accounting student.

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

"Obama's Mental Health Solution Falls Flat," by Nicole Bailey, Townhall, December 2, 2013 ---

. . .

The Obama administration has expanded mental health care coverage, but the latest research shows that psychiatrists often do not accept insurance at all. When only 43% of psychiatrists accept Medicaid, it is difficult to see how expanded coverage will help mental health patients.

Psychiatrists accept medical insurance less frequently than other specialists across the board, according to the study published in JAMA Psychiatry by researchers from three separate medical schools:

  • 55.3% of psychiatrists accepted medical insurance in general, compared to 88.7% of other physicians
  • 54.8% of psychiatrists accepted Medicare, compared to 86.1% of other physicians
  • 43.1% of psychiatrists accepted Medicaid, compared to 73.0% of other physicians

The mainline media seems to avoid the greatest concerns of Obamacare --- concerns about making hospitals and doctors absorb most of the costs of medical care during the 90-day premium default grace period and the cost of serving patients who afterwards renege on paying the deductible portions that they agreed to pay to get lower premium plans.

The USA now has a dual health care program --- the highest quality health care in the world for the wealthy on Cadillac medical insurance plans and inferior quality health care in the chaos of Obamacare that will force soaring inflation in health care provider pricings. Your local Congressional representative is signing up for a Cadillac plan paid for by taxpayers.

I never knew about ACA consumer add-on taxes until this was reported today by CBS News
"As Obamacare Deadline Looms, Insurance Companies Pile On The Taxes," CBS News, December 26, 2013 ---

. . .

And there’s more: most insurance companies don’t tell you about the taxes they add to their premiums. The numbers will vary, but one subscriber said their tax amount is $23.14 a month, or nearly $278 annually.;

Other add-ons include:

* A 2 percent premium tax on every health plan.

* A user fee of 3.5 percent to sell through the online marketplace.

* A $2-per-policy fee.

Nonetheless, supporters of the Affordable Care Act claim the neediest will get the best coverage.

“People who make a little more will pay more; people who make a little less will pay less,” Arevalo said.

Critics say most insurers don’t specifically post taxes on invoices, and some question how, in the case Brennan showed earlier, Alabama Blue Cross-Blue Shield was able to be so specific.

Watch the video

Also see

Surely Chuck you cannot argue that having premiums and choices of plans vary so drastically across zip codes is fair.
Look at the maps!

The variable premiums and deductibles that were somewhat unfair by zip codes before the ACA have exacerbated those and are increasingly unaffordable in some zip codes. The USA Today (December emphasizes this ---
"Lack aid? Many counties have only pricey plans," by Jayne O'Donnell, USA Today, December 26, 2013 ---

 More than half of the counties in 34 states using the federal health insurance exchange lack even a bronze plan that's affordable — by the government's own definition — for 40-year-old couples who make just a little too much for financial assistance, a USA TODAY analysis shows.

 Many of these counties are in rural, less populous areas that already had limited choice and pricey plans, but many others are heavily populated, such as Bergen County, N.J., and Philadelphia and Milwaukee counties.

More than a third don't offer an affordable plan in the four tiers of coverage known as bronze, silver, gold or platinum for people buying individual plans who are 50 or older and ineligible for subsidies.

Those making more than 400% of the federal poverty limit — $47,780 for an individual or $61,496 for a couple — are ineligible for subsidies to buy insurance.

The USA TODAY analysis looked at whether premiums for the least expensive plan in any of the metal levels was more than 8% of household income. That's similar to the affordability test used by the federal government to determine whether premiums are so expensive consumers aren't required to buy plans under the Affordable Care Act.

The number of people who earn close to the subsidy cutoff and are priced out of affordable coverage may be a small slice of the estimated 4.4 million people buying their own insurance and ineligible for subsidies. But the analysis clearly shows how the sticker shock hitting many in the middle class, including the self-employed and early retirees, isn't just a perception problem. The lack of counties with affordable plans means many middle-class people will either opt out of insurance or pay too much to buy it.

The prices of exchange plans have shocked many shoppers, especially those who had plans canceled because they did not meet the ACA coverage requirements. But experts are not surprised.

"The ACA was not designed to reduce costs or, the law's name notwithstanding, to make health insurance coverage affordable for the vast majority of Americans," says health care consultant Kip Piper, a former government and insurance industry official. "The law uses taxpayer dollars to lower costs for the low-income uninsured but it also increases costs overall and shifts costs within the marketplace."

Along with underscoring how high rates are in many places, the analysis could portend more problems for the health law's troubled rollout. The Congressional Budget Office projected 7 million people would sign up for the law by the end of 2014 and enrollment is already falling several million short of that goal. Insurers need a lot of relatively healthy people to sign up for insurance to make up for the higher cost of insuring the less healthy. Highly subsidized lower-income consumers who haven't had insurance before often weren't getting regular doctors' visits. If many of those making about $50,000 for an individual or about $62,000 in household income for a couple opt out of the new health care system, it will deprive it of some of the counterbalancing effect needed.

Still, about 95% of consumers live in states where the average premiums are below earlier estimates, says Department of Health and Human Services spokeswoman Joanne Peters.

"The new Marketplace is night and day from what consumers faced in the individual market before the health care law, where they could see unlimited out-of-pocket expenses for plans with limited benefits and high deductibles, if they can even get coverage without being denied for a pre-existing condition," says Peters.

Many ACA-compliant plans will cover prescription drugs, routine care for chronic conditions and primary care visits even before deductibles are met, Peters notes.

But those aren't the plans that are affordable to many middle-class individuals buying insurance. In many cases, catastrophic plans — which USA TODAY excluded from its analysis — may be all that's left for consumers on the exchanges. These high-deductible plans are generally only available for consumers under 30, who are least likely to need to use them, but they can also be purchased by people who don't have other affordable options available in their area. These plans generally require consumers to pay all of their medical costs up to a certain amount — often $6,000 or more — although preventive benefits such as physicals have to be covered under the new law.

President Obama said last week that people whose plans were canceled and think the options on the exchanges are too expensive aren't required to buy insurance or can buy a catastrophic plan through what's known as a "hardship exemption." But most people actually do want insurance, says financial counselor and author Karen McCall.

"Every one of those people, if they have any consciousness and aren't totally self-medicating, would prefer to have insurance," says McCall, author of the book Financial Recovery. "You could go a year and not get any benefit of health insurance, but there is a deep emotional need to know that we have proper insurance."

State and federal exchange officials approve the rates health insurers can offer, and plans are then subsidized to levels that make them affordable for those below 400% of the poverty level. Karen Pollitz, a senior fellow at the Kaiser Family Foundation, acknowledges that catastrophic and even bronze plans would be very difficult for many 40 or 50-something consumers to afford with their $5,000-$6,000 annual deductibles.

"Most people don't have that kind of money in the bank, and I think it's going to create problems for people," Pollitz says.

Although premiums are unaffordable in many places now, protections in the law will prevent the massive jumps in premiums that characterized the individual insurance market before the ACA, she says.

Individual policies before had only the "optics of affordability and no dependability," Pollitz says. "What good is protection if it doesn't work when you need it?"

More than half of the counties in 34 states using the federal health insurance exchange lack even a bronze plan that's affordable — by the government's own definition — for 40-year-old couples who make just a little too much for financial assistance, a USA TODAY analysis shows.

Many of these counties are in rural, less populous areas that already had limited choice and pricey plans, but many others are heavily populated, such as Bergen County, N.J., and Philadelphia and Milwaukee counties.

More than a third don't offer an affordable plan in the four tiers of coverage known as bronze, silver, gold or platinum for people buying individual plans who are 50 or older and ineligible for subsidies.

Those making more than 400% of the federal poverty limit — $47,780 for an individual or $61,496 for a couple — are ineligible for subsidies to buy insurance.

Jensen Comment
If we are going to have affordable health care for all then the premiums should be affordable by all and not my some zip codes suffer much more than people living in other zip codes.


  1. The new rules in many states for extending free Medicaid on the bases of only income without tests of assets (such as students having million dollar trust funds) are huge moral hazards for millions of people to get totally free medical service and medications. My wife's long term friend (for over years) has a daughter living across the street in Longview Texas. The daughter put her share of their $200,000 plus house into her husbands name, divorced her husband, quit her job, and is now on welfare and Medicaid for herself and her children. She still lives in the house with her husband and readily admits this was a sham divorce. Her "husband" makes over $70,000. She tells the welfare folks she's living across the street with her parents --- which is a blatant lie.

    In Texas she had to sign off on her ownership of the house. In one of the states relaxing Medicaid rules she should get Medicaid and completely own the house herself. as long as her "former husband" paid the property taxes and other house expenses. In fact she could own a million dollar house and still get Medicaid's free health care.

  2. In order to make their premiums lower (with or without subsidies) most people are opting for bronze and silver plans where they must pay 30%-50%) of all medications and medical care. If they get hit with big bills most of these people just do not have the money to pay their deductibles. Either they will forego treatment or pass their bad debts on to doctors and hospitals .

  3. The ACA law should have been enacted only after rule enforcement checks were in place. I think the law should not have commenced without having the IRS matching incomes against subsidies and Medicaid expansion.

  4. In the past people who defaulted on premiums became uninsured people who were treated in special facilities such as county hospitals funded by taxpayers. Now people who default on premiums get a 90-day grace period where insurance companies pay their medical costs for 30 days and the doctors and hospitals have to pay for their medical care for 60 days.
  5. President Obama was smart to delay the employer-provided plans for a year. The main advantage of this is that employees are not yet shocked by how much more they will be paying out-of-pocket for higher premiums, higher co-pays, and hi9gher deductibles.
    "Employees will pay more for health care in 2014: New year likely to bring higher deductibles and co-pays, smaller employer contributions." by Julie Appleby, USA Today, December 19, 2013 ---


Jensen Comment
The problem is that the ACA is just not sustainable unless drastic changes are made. The ACA assumed that wealthier and healthier people were going to pay for almost all the expansion of free Medicaid medical care and subsidized premiums. But the prices that were set are just not affordable to too many people and in order to have medical plans other people are opting for high deductibles that they will not be able to pay in times of expensive medical care needs.  Furthermore, the pricings are too variable and unfair across all the counties of the USA.

The ACA is just not sustainable. It should have been a national health plan from the beginning. Turning it into a national health plan in the future will be an enormous shock to the slowly expanding economy and a disaster to the entitlements disaster.

But I don't really care all that much. I will be dead before the enormous disasters hit.
I just hate the fraud and unfairness that the ACA is exacerbating. It turns out that the preconditions problem for uninsured people was not all that great a problem that could have been solved much more cheaply. The majority of the the problem with uninsured people was that they either could not afford or did not want to afford medical insurance that is now ever more costly to many of these same peopl


What happens when your network coverage does not extend to where you travel or live part of the year in the USA?

The answer varies with the plan your choose where you live most of the time.

"ObamaCare Found To Restrict Where You Live And Travel," Investors.com, December 18, 2013 ---

. . .

But Americans are now about to find themselves grappling with their own bureaucratic Berlin Wall. The American Thinker's Stella Paul has exposed the virtually unnoticed fact that within the ObamaCare exchanges so many Americans are being forced into, "most plans only provide local medical coverage."

Paul warns this will have "a profound impact on the real-estate market, particularly the second home sector, and on the travel business." She interviewed one Connecticut retiree whose health required having a winter home in South Carolina. Her $450-per-month, $2,500 deductible, no co-pay Blue Cross policy that had worked well in both states was suddenly canceled.

The new policy she was offered under ObamaCare was twice as expensive, with a deductible costing $1,000 more, and no out-of-network coverage.

Having had a surgery at Memorial Sloan-Kettering Cancer Center in New York City, out-of-network coverage was a must. And she found it. "It's $900 a month," she told Paul, "with a $7,000 deductible and a co-pay on everything. Basically, it's catastrophic insurance, and I'll be paying my South Carolina doctors out of pocket."

A prominent New York insurance broker pointed out that most of the policies offered on the ObamaCare exchanges are not national networks, so "if you need routine medical services, they will not be covered when you leave your local area," as they were before.

Travel health insurance, unfortunately, only covers emergencies. So, the broker told Paul, "a large portion of the population will have their insurance as a consideration for their mobility, which they never had before."

Imagine having to take all this into account in making decisions about where in America you want to live.

And as Paul asks, "With Americans no longer able to receive routine medical services when they travel, will they start showing up in emergency rooms for sore throats and backaches? And how will these new throngs of patients affect the waiting time of people with genuine medical emergencies?"

Meet the latest unpleasant ObamaCare surprise, right on the heels of HHS Secretary Kathleen Sebelius this week finally admitting that, contrary to Obama's endlessly repeated promise, "there are some individuals who may be looking at increases" in premiums.

Unrestricted movement is a birthright of our liberty. Even socialized medicine's harshest opponents didn't suspect Washington would trample that freedom.

Read More At Investor's Business Daily:


Obamacare:  Limits Placed Upon Choosing Your Own Doctor and Hospital

Jensen Comment
The media along with President Obama led us to believe that medical insurance plans were going to vary only be the amount of the deductibles and age of the applicant. We are now learning more about differences in medical networks of hospitals and doctors. The President kept insisting that we could keep our present doctors. Technically that was not a lie, but what was left unsaid is that to literally keep your favored doctors and hospitals you may have to opt for the more expensive Cadillac plans having "broader network coverage "of physicians and selective hospitals that opted out of serving the lower-priced limited network plans.

Dr. Ezekiel Emanuel --- http://en.wikipedia.org/wiki/Ezekiel_Emanuel

"ObamaCare in Translation Ezekial Emanuel explains what the President really meant about your doctor," The Wall Street Journal, December 8, 2013 ---

. . .

Mr. Wallace: "It's a simple yes or no question. Didn't he say if you like your doctor, you can keep your doctor?"

Dr. Emanuel: "Yes. But look, if you want to pay more for an insurance company that covers your doctor, you can do that. This is a matter of choice. We know in all sorts of places you pay more for certain—for a wider range of choices or wider range of benefits. The issue isn't the selective networks. People keep saying, 'Oh, the problem is you're going to have a selective network.'"

Mr. Wallace: "Well, if you lose your doctor or lose your hospital—"

Dr. Emanuel: "Let me just say something. People are going to have a choice as to whether they want to pay a certain amount for a selective network or pay more for a broader network."

Mr. Wallace: "Which means your premiums would probably go up."

Dr. Emanuel: "They get that choice. That's a choice you've always made."

It's nice to hear a central planner embrace choice, except this needs translating too. The truth is that you may be able to pay more to keep your doctor, but only after you choose one of ObamaCare's preferred plans that already costs you more than your old plan that ObamaCare forced you to give up.

Jensen Comment
What Dr. Emanuel failed to mention is that the "broader expensive network" plans are Cadillac plans for which employers lose their tax deductions.

The Cadillac Tax: A Game Changer for U.S. Health Care:  Can you explain this tax to your students?
Do you understand the Cadillac Tax provision of the Affordable Healthcare Act that will have a monumental 2018 impact on healthcare coverage of employees who are now covered by employer plans --- plans now costing the government over $250 billion per year? But not for long!

Do you understand the Cadillac Tax provision?
Me neither. As Nancy Pelosi said years ago, Congress passed the ACA before anybody in the USA had a chance to study all the surprises in this the enormous bill.

If you're covered presently on your employer's plan you should most certainly learn about the Cadillac Tax provision that kicks in in 2018.

"The Cadillac Tax: A Game Changer for U.S. Health Care." by Jonathan Gruber (MIT), Harvard Business Review Blog, November 15. 2013 ---

Jensen Comment
Non-profit organizations, especially labor unions, for whom Cadillac plans are especially popular will be allowed to keep their plans without penalty since tax deductions are not of concern to them.

Having preferred networks of doctors and hospitals is not unheard of in national health care plans. Germany, for example, has both public health insurance plus premium coverage with private insurance. Cuba notoriously has bourgeoisie plans for members of the Communist Party and the wealthy versus  proletariat plans for the poor people.

If you Congressional representative brags about signing up for Obamacare ask if he or she has a Cadillac Obamacare plan that lets them choose their own doctors and hospitals.

Congress Has a Cadillac Plan for a Lifetime of Coverage

"Harry Reid Takes Taxpayer Subsidy: 'My Employer Helps Me Pay for My Health Care'," CNS News, December 18, 2013 ---

Senate Majority Leader Harry Reid (D.-Nev.), whose salary is $193,400 a year, said he has purchased a health care plan through the D.C. Obamacare exchange and that he is accepting the federal subsidy that can run up up to $11,378 per year for a member of Congress to purchase a plan on that exchange.

“I’m just like 150 million other people in America,” Reid said. “My employer helps me pay for my health care.”

- See more at: http://cnsnews.com/news/article/penny-starr/harry-reid-takes-taxpayer-subsidy-my-employer-helps-me-pay-my-health-care#sthash.G5apDcuR.dpuf
Senate Majority Leader Harry Reid (D.-Nev.), whose salary is $193,400 a year, said he has purchased a health care plan through the D.C. Obamacare exchange and that he is accepting the federal subsidy that can run up up to $11,378 per year for a member of Congress to purchase a plan on that exchange.

“I’m just like 150 million other people in America,” Reid said. “My employer helps me pay for my health care.”

- See more at: http://cnsnews.com/news/article/penny-starr/harry-reid-takes-taxpayer-subsidy-my-employer-helps-me-pay-my-health-care#sthash.G5apDcuR.dpuf

Senate Majority Leader Harry Reid (D.-Nev.), whose salary is $193,400 a year, said he has purchased a health care plan through the D.C. Obamacare exchange and that he is accepting the federal subsidy that can run up up to $11,378 per year for a member of Congress to purchase a plan on that exchange.

“I’m just like 150 million other people in America,” Reid said. “My employer helps me pay for my health care.”

Continued in article

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

"A Large New Tax on Small Business:  The latest ObamaCare levy takes effect Jan. 1." The Wall Street Journal, December 29, 2013 ---

ObamaCare includes so many taxes that it's hard to keep track, but one of the worst takes effect on Jan. 1. This beaut is a levy on health insurance premiums that targets the small business and individual markets.

At $8 billion in 2014 and $101 billion over the next decade, the insurance tax is larger than ObamaCare's taxes on medical devices and prescription drugs combined. The Internal Revenue Service classifies the tax as a "fee" but it functions like an excise tax on premiums. The IRS collects an annual flat amount specified by the Affordable Care Act to be allocated among the insurers according to market share.

But not all markets. IRS regulations published in November excluded "any entity that is a self-insured employer to the extent that such employer self-insures its employees' health risks." Since about four of five employers with more than 500 workers and most union-negotiated health plans are self-insured, they are spared from the tax. So is insurance on behalf of "government entities," such as original Medicare (but not privately run Medicare Advantage).

This political selectivity means the most gold-plated public, private and labor plans are exempt and the tax burden falls on the saps who work for small businesses, the self-employed and individuals—i.e., the people who can least afford it.

The White House tells business that the tab will be picked up by deep-pocketed insurers, which is good for a laugh. The Congressional Budget Office reports the tax will be "largely passed through to consumers in the form of higher premiums" and "would ultimately raise insurance premiums by a corresponding amount." The Joint Tax Committee and private economists, such as former CBO director Doug Holtz-Eakin, say the tax will boost insurance costs about 2% to 2.5%. The consultant Oliver Wyman estimates the take will rise to as much as $500 per covered worker by decade's end.

Wasn't the Affordable Care Act supposed to be about expanding coverage in part by lowering premiums, not slapping on more overhead? By this liberal logic taxing cigarettes should create more smokers.

Oh, and to salt the wound, this "fee" is not deductible for corporate income tax purposes. In other words, health plans pay the tax and then federal and state taxes on the taxed amount. Mr. Holtz-Eakin estimates this unusual taxes-on-taxes rule means that the effect on premiums is 54% larger than the dollar amount of the tax itself.

The research arm of the National Federation of Independent Business calculates that the higher insurance costs will shrink hiring by 146,000 to 262,000 jobs over the next decade, with 59% of those losses hitting small business. They'll also be further encouraged to dump coverage and send their workers to the mercies of the ObamaCare exchanges. The latter was probably a main liberal purpose from the start.

Louisiana Republican Charles Boustany and Utah Democrat Jim Matheson's repeal bill already has 229 cosponsors, or a House majority, including some dozen Democrats. The White House naturally promises a veto. Happy New Year.

President Obama's Blatant Political Payoff:  Unions Get Tax-Free Cadillac Health Plans Unlike the Rest of the USA
Oops Some Selected Corporations Get Breaks as Well
"Unions Get Big ObamaCare Christmas Present As Other Self-Insured Groups Get Scrooged," by Larry Bell, Forbes, December 22, 2013 ---

As a presumed constitutional scholar, Barack Obama should know that while a president has authority to check the Legislative Branch by recommending legislation to be passed by Congress, or through presidential veto, he or she cannot legislate through executive fiat or pick which parts of the law to comply with or decline. Article 2, Section 3, Clause 5 of our Constitution requires that the president “…shall take care that the Laws be carefully executed.” It doesn’t limit those laws or encapsulated provisions to the particular ones that he or she likes.

Speaking before the House Judiciary Committee on December 3, Professor Jonathan Turley of George Washington University observed that the president isn’t taking that “Laws be faithfully executed” oath very seriously, particularly with regard to his signature Affordable Care Act (aka.“ObamaCare”).

Although Turley had voted for Obama and professes to agree with him on health care and other issues, he warned that his power grabs are causing “the most serious constitutional crisis in my lifetime.”

The White House Earns Its Union Label

In addition to delaying and rewriting key ACA provisions and carving out a special subsidy for members of Congress, Obama’s latest constitutional violation will exempt unions from a fee the law imposes upon all large group health plans. That provision which appears in Section 1341 (b)(1)(A)  establishes a reinsurance program to compensate insurers on exchanges in the individual market if they are hit with higher than expected costs to cover those with pre-existing conditions. This will come from insurers and self-insured employers who pay in proportion to the number of people they cover. The target is to raise $25 billion during 2014, amounting to $63 per covered employee. The union exemption would kick in for 2015 and 2016.

As reported in a Wall Street Journal editorial, “The unions hate this reinsurance transfer because it takes from their members in the form of higher premiums and gives to people on the exchanges.”

The union exemption deal will require that insurers who aren’t fully reimbursed by fees along with non-exempted self-insured employers will have to pay more to make up the shortfall. How will they make that up? How else but by passing on higher costs to their customers? The Department of Health and Human Services has confirmed that the fee for other non-exempt plans will be higher as a result.

Responding to union pressure, an exemption buried on page 72,340 of the December 2 Federal Register states: “Our continued study of this issue leads us to believe that this provision may reasonably be interpreted in one of two ways – it may be interpreted to mean that self-insured, self- administered plans must make reinsurance contributions, or it may be interpreted to mean that such plans are excluded from the obligation…upon further consideration of the issue, we believe the statutory language can reasonably be read…”

Yet as Betsy McCaughey points out in an Investor’s Business Daily piece, while Taft-Hartley plans self -insure and self-administer, the weasel-wording is a ruse. She writes:  “That’s a lie. The ACA’s reinsurance provision doesn’t use the word ‘self-insured’ or distinguish between plans that pay their own claims and plans that hire administrators.”

Here, “self-insured” refers to a business which pays directly for its workers’ policy costs and hires an insurer as a third-party administrator to process claims and manage care. “Self-administered” plans go one step farther and manage their benefits in-house. As the Wall Street Journal observes, other than collectively-bargained Taft-Hartley plans, “Almost no business in the real world still follows this old –fashioned practice”. Such insurance covers about 20 million union members, and about four out of five Taft-Hartley trusts.

Eleven Republican senators who see the exemption as blatant congressional circumvention and cronyism by the Obama administration to curry favor with political allies have introduced a bill called the “Union Tax Fairness Act” (S. 1724) to block it. Included are U.S. Senators Orrin Hatch (R-UT), John Thune (R-SD), Lamar Alexander (R-Tenn.), James Inhofe (R-OK), David Vitter (R-LA), Mike Enzi (R-WY), Ron Johnson (R-WS), John Barrasso (R-WY), Tim Scott (R-SC), Saxby Chambliss (R-GA), and Tom Coburn (R-OK).

Senator Hatch commented: Since the overwhelming majority of self-administered health insurance plans are run by unions, let’s call this what it is: a political payback by the administration to its union friends for backing this disastrous law. But the fact is, the White House doesn’t have the authority to change the law on its own and, as this bill makes clear, any attempt at a Big Labor carve-out from ObamaCare must be approved by Congress.”

Senator Thune said: “Unions should not be granted a special exemption from ObamaCare’s reinsurance tax just because the president fears further union backlash on his signature law. These unions agreed to pay this tax when they endorsed ObamaCare, but now that they are finding out what the law means for them and their plans, they want out. Rather than granting special backroom deals to political allies, the administration should support fairness for all by permanently delaying the law for every American.”

Senator Alexander added: The Obama administration should not reward its labor union friends and allies who helped pass the health care law by giving them a carve-out from the law’s worst provisions. This hefty reinsurance fee is one of the many job-killing taxes that helped pay for the passage of the law – the administration should be embarrassed that it would consider exempting their union cronies without providing similar relief to our nation’s employers and faith-based and charitable organizations.”

The unions weren’t the only cronies to get a special ObamaCare break. Insurers who went along with ACA from the beginning in order to expand markets from previously uninsured populations on the taxpayer dole didn’t want any of that same medicine for themselves.

Ten giant health insurance companies, including Blue Cross/Blue Shield, Cigna and Aetna, went to the White House and received waivers allowing them to impose yearly cap limits on health coverage they provide to their own employees. Under ObamaCare, companies which aren’t exempt are required to phase out caps on annual health care benefits by 2014.

Cigna Corp., the largest waiver exemption beneficiary, was allowed to cap benefits for its 265,000 employees. This exception was granted just slightly less than one month before its CEO David M. Cordani told attendees at a November 9, 2010 Reuters Health Summit: “I don’t think it’s in our society’s best interest to expend energy in repealing the law.”

Aetna was granted a waiver on October 1, 2010 allowing it to cap benefits for its 209,423 enrollees. The company’s CEO Mark Bertolini had previously expressed mixed feelings about the legislation. Writing in a March 2010 Op/Ed which appeared in the Hartford Courant shortly after it became law, he said: “When fully implemented, the new law will have a major effect on the market…Individuals and small employers will have more options and choices. The private sector will do what it does best: innovate to solve problems,”

The BCS Insurance Group which notes on their website “We are the premier source for insurance and reinsurance for Blue Cross and Blue Shield plans” received an ObamaCare waiver for its 115,000 enrollees. In fact three divisions of Blue Cross/Blue Shield reportedly received waivers. They include Excellus Blue Cross/Blue Shield (18,860 enrollees), Blue Cross/Blue/Shield of Tennessee (20,205 enrollees), and Mountain State Blue Cross/Blue Shield with 270 enrollees.

HHS waivers from oversight rules were granted to “Medigap” policy providers which exempts them from releasing and explaining health care payment rate increases. According to the Daily Caller, AARP, the largest of these, advocated for ObamaCare to include an attack on their biggest competitor, Medicare Advantage.

AARP was a driving force behind getting ObamaCare through Congress. They conducted a $121 million advertising campaign to push it, plus spent millions more lobbying for it on Capitol Hill. After President Obama called for $313 billion in Medicare cuts to fund his signature program, Medicare Advantage took the big hit.

Broken Premises

Don’t forget that ObamaCare would have encountered the same forgotten fate as HillaryCare had it not been for the support of big unions and insurers. Perhaps recall those throngs of United Federation of Teachers (UFT) and Service Employee International Union (SEIU) members picketing the Supreme Court in favor of its approval carrying signs that read “Protect Working Families, Protect the Law”.

And they already received gratitude. Immediately after the provisions took effect, unions requested and were granted 1,231 waivers exempting 543,812 of their employees compared with only 69, 813 non-union worker exemptions.

Continued in article

More Bad News for ObamaCare --- http://online.wsj.com/news/articles/SB10001424052702304020704579278472445817540?mod=djemEditorialPage_h

Jensen Comment
With most of the millions of signing up "affordable health care" getting free medical care under the expanded Medicaid programs or premiums subsidized by the government, it shouldn't end up as a surprise who will really pay for medical care in the future. That's becoming a no-brainer. Even clever millionaires such as students with trust funds are now eligible for free Medicaid health care.

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

"More Bad News for ObamaCare," by Allysia Finlay, The Wall Street Journal, December 24, 2013 ---

Many Democrats who voted in favor of ObamaCare figured that voters would warm up to the law once its vaunted benefits and insurance subsidies kicked in. To adapt Nancy Pelosi, Congress had to pass the law for the public to love what's in it. Their hope hasn't panned out.

Opposition to ObamaCare hit a record high this week in a CNN poll, with 62% of respondents saying they oppose the law compared to 35% who favor it. Disapproval registered at 54% in December 2010, a month after Democrats were routed in the midterm elections, and 59% when the law passed in March 2010.

Democrats hoped that letting kids to stay on their parents' insurance until age 26, guaranteed coverage of pre-existing conditions, free preventative care, mandated minimum benefits and a ban on lifetime and annual limits would boost support for the law. Ditto subsidies for consumers earning up to 400% of the poverty line.

But instead, these putative benefits have driven up premiums and deductibles, which in many cases aren't offset by the federal insurance subsidies. Many insurers as a result have restricted provider networks to keep costs down. Worse, the law's mandates have forced insurers to cancel millions of policies altogether and restricted consumers' choice. While the exchange glitches may be due to haphazard planning, these problems are fundamental to the law.

The Obama administration has tried to provide political cover to vulnerable Senate Democrats up for re-election next year—Alaska's Mark Begich, Louisiana's Mary Landrieu and Arkansas' Mark Pryor, among others—with administrative patches like allowing insurers to renew cancelled policies through next year. But the White House fixes haven't improved support for the law. Instead, they underscore that Democrats really didn't know what was in the law when they passed it and didn't much care. And that may help explain why the public has continued to sour on ObamaCare.

"Affordable Care Act: 17 Million Can Get Subsidies," by Mary Agnes Carey, WebMD News from Kaiser Health News, November 5, 2013 ---

Jensen Comment
Fraud is inevitable and cannot be prevented when it comes to giving out subsidies to to insured that are not legally entitled to such subsidies. Firstly, there's the $2 trillion underground economy where people are receiving income that even the IRS cannot detect --- those folks who work for unreported cash earnings. We're talking about millions of people who do not report any income to the IRS or greatly under report their incomes ---

Secondly, the 17 million reported above does not jive with the estimated 49.5% (of 130 million) of taxpayers who file tax returns but do not pay any income taxes. Some of them have incomes offset by credits such as credits for dependents, but its likely that the nearly all of 50% of taxpayers who pay no qualify, at least on paper, for subsidies ---

Most of those making more than $100,000 pay some income taxes. Bloomberg reports that 98% of those that pay no income taxes have less than $100,000 in earnings. Most are availing themselves of recent tax breaks such as energy credits, tax breaks from employer contributions to medical insurance, increased tax breaks for dependents, and deferred tax breaks such as breaks professors get for employer contributions to TIAA-CREF.

Ernst & Young Reporting Briefs for Health Care Providers
These are capsule summaries of changes and pending changes in accounting rules as they might affect health care providers. They avoid issues with the Affordable Health Care Act that may affect health care providers.

Jensen Comment
There are many emerging and sensitive issues for accounting systems under the affordable health care act. For example, software must be written for prescreening patients that come in with various health care plans ranging from restrictive network plans versus Cadillac plans giving more choice as to hospitals and doctors. Prescreening cash collection systems for deductibles may have to be revised. Accounting systems will have to be rewritten such as when a hospital must now recognize what medications and services are covered by each patient's plan versus those that are excluded from coverage. The AHCA is expected to increase coverage of some medications and decrease other coverages of medicines. One controversy is that insurers cannot deny coverage of patients with preconditions but the coverage of their medications can be denied, especially extremely expensive medications such as those costing more than $1,000 per day.

Health care providers are now in negotiations with drug manufacturers to lower the cost of some very expensive medications such as those used to fight cancer. Until manufacturers lower some prices or succeed in getting added subsidies for patients, accounting systems will have to drill down to decide what to bill patients for medications and services not covered in each patient's insurance plan.

As the saying goes, when it comes to accounting systems and software, the Devil is in the details.

I never new about ACA consumer add-on taxes until this was reported today by CBS News
"As Obamacare Deadline Looms, Insurance Companies Pile On The Taxes," CBS News, December 26, 2013 ---

. . .

And there’s more: most insurance companies don’t tell you about the taxes they add to their premiums. The numbers will vary, but one subscriber said their tax amount is $23.14 a month, or nearly $278 annually.

Other add-ons include:

* A 2 percent premium tax on every health plan.

* A user fee of 3.5 percent to sell through the online marketplace.

* A $2-per-policy fee.

Nonetheless, supporters of the Affordable Care Act claim the neediest will get the best coverage.

“People who make a little more will pay more; people who make a little less will pay less,” Arevalo said.

Critics say most insurers don’t specifically post taxes on invoices, and some question how, in the case Brennan showed earlier, Alabama Blue Cross-Blue Shield was able to be so specific.

Watch the video

From the CFO Journal's Morning Ledger on December 20, 2013

White House will allow some to buy catastrophic health plans. The Obama administration will allow some of the millions of Americans whose insurance policies had been canceled to purchase bare-bones plans next year, the WSJ reports. Health and Human Services Secretary Kathleen Sebelius told a group of senators in a letter that people whose policies had been canceled would be allowed to purchase “catastrophic” plans. The move could worry insurers because the typical person buying a catastrophic plan is healthy and expects to incur few medical expenses in the coming year. Insurers would prefer that those people purchase a pricier policy on the new exchanges, where they would balance the risk of those with illnesses.

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Message from Chuck Pier on December 24, 2013

Hi Bob.

I'm curious about the figure of 70% of California physicians boycotting the healthcare exchange plans?

I too had initially heard this number but thought it seemed too high to me. Michael Hitzik of the LA Times did investigate this number and found it to be based on anecdotal remarks of several health insurance brokers. It then took on larger meaning when the head of the California Medical Association (CMA) was asked if he thought that number was correct and he said that it could be. Official spokespeople from the CMA said they would have no way of knowing because they do not have access to any numbers that would report this figure. Hitzik did report that the only numbers that he could find we're from California Covered, which is the state healthcare exchange, and they showed that 80% of the doctors in the state would be available to exchange policies. Link:

I realize that the LA Times is part of the progressive media but do any non progressive media have verifiable data to back up that 70% number? From what I can see this number is one that gets repeated over and over without any verification and becomes part of "common knowledge."


December 25, 2013 reply from Bob Jensen

Hi Chuck,

I think there are degrees of boycotting. One way to boycott is to refuse to accept patients on certain medical insurance plans. Some hospitals and doctors presently will not accept Medicare patients because of caps on what Medicare will pay. The law does not allow these patients to pay extra in cash beyond what Medicare will pay. Legal supplemental plans, will however, pay the Medicare co-payments (20%).

Many of the nation's top hospitals are refusing Obamacare exchange plans largely because of the various ways the ACA passes its bad debts onto medical providers such as allowing patients in default a 90-day grace period in which the medical provider must cover 60 days of that 90 days during which there is a high probability that the patient in default on premiums will not pay the doctors and hospitals after insurance companies stop paying after 30 days of default.

There are huge risks of default on the high-level deductible exchange plans like the bronze and silver plans. For example, a patient in default on premium payments for 50 days who is admitted to a hospital will not be covered by the insurance company but must be covered by the hospital and the physicians who treat the patient in default. The hospitals and physicians can, however, turn the patient away if they are not participating in the patient's exchange plan. They may not charge extra, however, to cover bad debt risks.

A second level of boycott that's easier for doctors than hospitals is to pre-screen patients and make them pay relatively large deposits in cash up front that cover potential bad debt losses. This is difficult for emergency rooms which is why I predict that more and more urban hospitals will close their emergency rooms. This is what happened in Boston when Romneycare kicked into the payments system. Emergency rooms just closed their ER services in some hospitals.

Such pre-screening is hard for hospitals even for non-emergency cases because of having to predict the length of stay and the cost of services such as cost of expensive medications while in the hospital.

Another tactic by hospitals when Romneycare kicked in was to drop their least profitable services which in nearly every hospital in Boston is obstetrics --- largely due to the high cost of malpractice insurance in Boston. In Texas, however, many OB-GYN physicians like my wife's Dr. Morris added OB back to their GYN practices when Texas passed a constitutional amendment capping punitive damages in lawsuits. Malpractice insurance coverage for hospitals and doctors is now much cheaper than in most other states.

I read where many physicians practicing on their own are retiring in droves or joining corporate medical practices. This, however, is not all the fault of Obamacare. The reason is largely the cost of going it alone in terms of office expenses, accounting and insurance billing expenses, medical staff expenses, and the increasing costs of malpractice insurance.

My first general practitioner in New Hampshire was a woman MD who was then part of a nearby Franconia group practice. Subsequently she decided to try it on her own. She's a great doctor but not good at business. Two years later after discovering the costs of going it alone she rejoined the group practice but now has to commute to Whitefield which is nearly an hour from her home in Franconia. .

An issue for even group practices is how to deal with patients who do not have the requisite cash deposits. I recently had eyelid surgery down in the Concord Hospital. The surgeon required $5,000 deposit that was later refunded when the insurance payment was received. I don't think that particular surgeon, who is highly specialized and overloaded with patients, would have done my non-emergency surgery without the deposit.

The sad thing is that people who previously had rather low deductibles and will now have very high deductibles under the bronze and silver plans will elect to not have medical treatments because they either cannot pay or prefer not to pay the increased deductibles. At least one study to date says that this problem will be worse for men than it is for women. Some may also refuse treatment because they do not have the liquidity to pay the requisite deposits. Hence the promise of getting more people insured rings hollow for people who cannot or will not cover their high deductible amounts.

One of our plumbers up here named Chris was the sole support of his wife, his children, and his wife's parents while contributing some to his own parents. To save money he cut way back on his expensive diabetes insulin. Apparently there is no cheap insulin. Chris later died in a diabetic coma at the age of 37. This is sad because at the time he was earning over $50 per hour. If he had lived longer, he would be making the current $80 per hour as a plumber in these mountains.

Bob Jensen



Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

Bob Jensen's threads on audit firm litigation and negligence ---

Current and past editions of my newsletter called Fraud Updates ---

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/