Tidbits Quotations
To Accompany January 15, 2015 edition of Tidbits
Bob Jensen at Trinity University

7 Ways Michelle Obama Positively Influenced Education in 2014 ---

As a young man, Francis Fukuyama sat at the knees of Derrida, Lacan, Barthes before concluding, “This was total bullshit”..
Wesley Yang, http://www.theguardian.com/books/2014/dec/27/francis-fukuyama-end-history-books-interview

I refuse this nomination (for France's highest honor) because I do not think it is the government's role to decide who is honourable.
Thomas Piketty --- http://www.businessinsider.com/afp-economist-thomas-piketty-refuses-frances-highest-honour-2015-1

"There are Americans who can do that work, and H1B workers are cheaper and undercut wages," Jackson said, referring to the class of visas most often used by tech workers.
Jesse Jackson's Appeal to Get Rid of Foreign Tech Workers --- http://www.cnbc.com/id/102290336#.

The #1 reason people die early, in each country ---
Dylan Matthews, Vox, January 2, 2015 ---

“progressive” is just another word for “socialist”
Bernie Sanders, USA Senate and possible socialist candidate for President in 2016

Climate change is confusing as Greenland loses its ice cover and Illinois freezes.
The Year 2014 globally is the warmest on record, but not in Illinois.
2014 finishes as 4th coldest year on record for Illinois ---

Choudary opens with a frank rejection of a cherished Western ideal: “Contrary to popular misconception, Islam does not mean peace but rather means submission to the commands of Allah alone. Therefore, Muslims do not believe in the concept of freedom of expression.”
Michael C. Moynihan --- https://twitter.com/mcmoynihan/status/553040827648602112
Jensen Comment
I don't think any my Muslim friends would agree with the above quotation and most certainly not in all contexts.

Demographics of Inequality in the USA --- http://www.ssa.gov/policy/docs/ssb/v64n4/v64n4p1.html
Somewhat dated but still revealing in terms of racial disparities
Racial and Ethnic Differences in Wealth and Asset Choices
Sharmila Choudhury
Social Security Bulletin, Vol. 64 No. 4, 2001/2002

Concluding Remarks
Research suggests that overall differences in wealth among racial and ethnic groups are generated primarily by the financial assets those groups own. Indeed, studies have shown that the wealthier a household, the more diverse and riskier its holdings of financial assets. The present analysis finds that at every income quartile and education level, minority households are less likely than white households to own a wide variety of assets--particularly riskier, higher-yielding assets. This finding suggests that minority and white households approach saving differently. To what extent saving behavior explains racial and ethnic differences in wealth remains to be answered, but researchers have found that the lower rate of stock ownership among black families prevented them from benefiting as much as white families from the recent economic expansion (Hurst, Luoh, and Stafford 1998).

What explains the hesitancy of minority groups to invest in risky financial assets? Lack of an appropriate financial environment in the home has occasionally been put forth as a cause,20 as has a lesser taste for risk, the higher information costs of acquiring newer kinds of assets, or both. Another possibility is that, by primarily targeting whites, financial brokers have created in minority communities a cultural bias against investing in riskier financial assets. Blacks have traditionally been more willing to invest in real estate and certificates of deposit because those industries have marketed their services to blacks and have agents who are themselves black. A recent article in the Wall Street Journal (Mabry 1999) claims that blacks have shied away from stocks in part because they mistrust Wall Street and that investment in risky assets will rise with an inflow of black investment professionals. In sum, a variety of factors may have effectively kept black and Hispanic households many years behind their white counterparts in acquiring financial expertise. Additional research is needed to understand those factors.

Lower rates of investment in the financial market will probably result in slower wealth creation in minority households. Finance professionals and community leaders have only recently focused on the possibility that black and Hispanic households are too concerned about present earned income and not concerned enough about building wealth. Some investment firms now have "relationship development teams" in major urban centers where advisers hold investing seminars and workshops (Mabry 1999). The Wall Street Project, a minority stockholders' plan, is calculated to increase black participation and has the support of important CEOs and public policy officials (Raspberry 1998). A similar effort is being made in the Hispanic community to encourage investing. Religious leaders, personal finance advisers, and financial firms have urged their community members to learn more about financial markets as they become part of the middle class.

Opening financial opportunities to comparatively disadvantaged minority households is a positive step in narrowing the wealth divide. It will become even more critical if Social Security reform places increased responsibility on individuals to manage personal accounts.


Be brave enough to start a conversation that matters.
Margaret Wheatley,

We must be willing to get rid of the life we've planned, so as to have the life that is waiting for us.
Joseph Campbell

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

Happiness is like a butterfly: the more you chase it, the more it will elude you, but if you turn your attention to other things, it will come and sit softly on your shoulder.
Henry David Thoreau

For the first time ever, there are 100 women in Congress
Sarah Kliff --- http://www.vox.com/2014/11/5/7160477/women-in-congress-first-time-100-legislators-midterms

Mahatma Gandhi’s List of the 7 Social Sins; or Tips on How to Avoid Living the Bad Life ---

Mayor de Blasio reappoints his cop hating Judge Laura Johnson to the Criminal Court bench ---

MSNBC Closes 2014 In Last Place ---

Moocher Hall of Fame --- https://danieljmitchell.wordpress.com/the-moocher-hall-of-fame/

Perhaps television viewers are shunning political programming outliers.
NBC covers both ends of the political spectrum with MSNBC and CNBC, both of which are tanking in terms of viewer interest. If I were to investigate some of the reasons I would look for boring repetitions of commentators saying the same things over and over and then over again.

CNBC to stop using Nielsen for ratings

MSNBC Closes 2014 In Last Place ---

CNBC and MSNBC are fighting back with non-political programming in some prime time slots.
For example, CNBC is now giving primetime coverage to exposes of business frauds? CNBC?
And MSNBC now features hidden camera thrillers (not comedy) in things like police chases and shoot outs that make the cops look abused. MSNBC?

Cops Say Nothing Happened at UVA Frat Accused of Gang Rape, But Who Really Cares? ---

According to the press release:

The reinstatement resulted after consultation with Charlottesville Police Department officials, who told the University that their investigation has not revealed any substantive basis to confirm that the allegations raised in the Rolling Stone article occurred at Phi Kappa Psi.

U.Va. President Teresa A. Sullivan informed fraternity officials of the decision to reinstate the chapter's Fraternal Organization Agreement with the University after learning of the update to the police investigation.

"We welcome Phi Kappa Psi, and we look forward to working with all fraternities and sororities in enhancing and promoting a safe environment for all," U.Va. President Teresa A. Sullivan said.

That's it? No apology? No sorry about our huge mistake and rush to judgment? Keep in mind that the false accusation had consequences for the Phi Psi house,

Continued in article

"Black And Hispanic Students Are Making Meaningful Gains, But It’s Hard To Tell," by Mikhail Zinshteyn, Nate Silver's 5:38 Blog, January 12, 2015 ---

Islam in Europe --- http://www.ritholtz.com/blog/2015/01/islam-in-europe/

I read about the no-go zones in Sweden in France, but none are as huge as the Birmingham with a population of over one million

Lies on Fox News about No-Go Zones in the United Kingdom
Birmingham Is A 'Totally Muslim' City Where 'Non-Muslims' Don't Enter
According to the above article and Wikipedia the above quotation is just not true --- Christianity is still the dominant religion in Birmingham with large Jewish as well as Muslim communities
There may well be no-go Zones within Birmingham. In Sweden there are small no-go zones where fire, and ambulance servers dare not go unaccompanied by police.

Norwegian Eco-Friendly House Produces More Than 3 Times The Energy It Needs ---

Jensen Comment
A key advantage is that this is a very small house not made for families. However, our friend Clinton (Skip) White informed us that he generates more power from his barn roof in Pennsylvania than he needs for a larger house. His home is probably not quite so eco-friendly as the above Norway house in other regards.

I collected rain water from our New Hampshire roof for a time, but there really was not much need since we usually get enough rain for our yard and gardens. Such water is not sanitary for drinking. I suppose I could haul it up to toilet tanks but this seems more symbolic than water-efficient with only two of us in the cottage.

While I lived in San Antonio it might have been more eco-friendly to collect rain water off the roof. But there would not have been enough of it to significantly lower our water volume used for lawn and garden irrigation. Swimming pools don't actually take that much water after they're filled. I was surprised how little of it evaporated relative to the rain supply for our pool in San Antonio home. Not that I ever, ever want another swimming pool!

My Cousin Don on a farm in northern Iowa heats and cools his home with a a second well that pumps water through his heating pipes. He no longer has heating oil delivered and rarely needs electric heat or cooling supplements. Of course not all this water gets returned to the well such that there is some runoff that ends up eventually in the Mississippi River after a long journey through other rivers. Other options include building an underground lagoon for recycling, but it can be expensive to build and cover the lagoon or underground tank. It's more efficient to build the lagoon or bury a tank at the same time you are building the basement for a new house.

So what's wrong with the President's "Free Tuition Plan" for the first two years of college?

"Obama's Free Tuition Plan Is a Subsidy for Colleges, Not Students," by Scott Shackford, Reason Magazine, January 9, 2015 ---

California has a very cheap community college program. Annual tuition can cost less than $1,500 a year. According to this college calculation service, you're likely to spend more on books than you will on your classes.

California also has a problem in that its community college system already cannot accommodate all the students who want to attend. In 2012, California reported having 470,000 students on waiting lists. The inability to provide classes for students was blamed on budget cuts, of course, not on its economic model. They did raise tuition rates, though, from $20 a unit to $46 a unit.

You cannot look at California's community college system and conclude that subjecting all community college students even further to the vicissitudes of government spending commitments is a good idea. Yet, this is exactly what President Barack Obama is proposing. Obama's "America's College Promise" proposal, reported yesterday and formally introduced today, would provide "free"—as in subsidized by federal and state governments—community college educations. Here's how the White House says it will work:

Enhancing Student Responsibility and Cutting the Cost of College for All Americans: Students who attend at least half-time, maintain a 2.5 GPA while in college, and make steady progress toward completing their program will have their tuition eliminated. These students will be able to earn half of the academic credit they need for a four-year degree or earn a certificate or two-year degree to prepare them for a good job.

Building High-Quality Community Colleges: Community colleges will be expected to offer programs that either (1) are academic programs that fully transfer to local public four-year colleges and universities, giving students a chance to earn half of the credit they need for a four-year degree, or (2) are occupational training programs with high graduation rates and that lead to degrees and certificates that are in demand among employers.  Other types of programs will not be eligible for free tuition.  Colleges must also adopt promising and evidence-based institutional reforms to improve student outcomes, such as the effective Accelerated Study in Associate Programs (ASAP) programs at the City University of New York which waive tuition, help students pay for books and transit costs, and provide academic advising and supportive scheduling programs to better meet the needs of participating students, resulting in greater gains in college persistence and degree completion.

Ensuring Shared Responsibility with States: Federal funding will cover three-quarters of the average cost of community college. States that choose to participate will be expected to contribute the remaining funds necessary to eliminate community college tuition for eligible students. States that already invest more and charge students less can make smaller contributions, though all participating states will be required to put up some matching funds. States must also commit to continue existing investments in higher education; coordinate high schools, community colleges, and four-year institutions to reduce the need for remediation and repeated courses; and allocate a significant portion of funding based on performance, not enrollment alone. States will have flexibility to use some resources to expand quality community college offerings, improve affordability at four-year public universities, and improve college readiness, through outreach and early intervention.

So right off the bat I see a huge incentive for further grade inflation for community colleges. Remember, of course, the free money getting tossed around is going to college faculty and administrators, not to students. It's not the students being subsidized, it's the college. So they're going to do everything in their power to keep these students attending, even if it results in students leaving college with associate's degrees they can barely read, which will subsequently devalue the degrees in the eyes of employers.

Even in an era of grade inflation, though, community colleges also have terrible completion rates for students seeking two-year degrees. The Chronicle of Higher Education offers a handy map showing completion rates lower than 10 percent in states like Indiana and Rhode Island after three years of attendance. The best state, South Dakota, has a 52.9 percent completion rate. For-profit colleges, for all their criticism for taking advantage of students (and federal subsidies), have a higher graduation rate than community colleges.

But to be clear, having a low completion rate over three years shouldn't necessarily be seen as a criticism of the community college system. What community colleges allow is the ability for people who cannot commit (for a variety of fiscal or personal reasons) to a traditional education model to nevertheless advance their educations. They may take a few classes and drop out because they have to prioritize other parts of their life, at least for the time being. Maybe they'll come back in time. Maybe not. Sometimes it's a money issue, but not always. In fact, the White House acknowledges exactly what community colleges are:

By 2020, an estimated 35 percent of job openings will require at least a bachelor’s degree and 30 percent will require some college or an associate’s degree. Forty percent of college students are enrolled at one of America’s more than 1,100 community colleges, which offer students affordable tuition, open admission policies, and convenient locations.  They are particularly important for students who are older, working, need remedial classes, or can only take classes part-time. For many students, they offer academic programs and an affordable route to a four-year college degree. They are also uniquely positioned to partner with employers to create tailored training programs to meet economic needs within their communities such as nursing, health information technology, and advanced manufacturing.

Okay, so why is this program needed at all?
If the White House's position is that community colleges are accessible and affordable, why a new program? What they're offering doesn't appear to be a loan. If a student falls into the extremely high drop-out rate for students, the government (and the taxpayers) don't get the money back. So the White House is promoting a program funded by taxpayers to subsidize—wait, I mean further subsidize—a system that has baked in an extremely high failure rate.

But again, this program is not a subsidy for students. It's a subsidy for faculty and college level administrative bloat. The Weekly Standard notes that the White House declined to detail the cost of the proposal, but the math is easy to calculate. The administration states that 9 million students would "save" $3,800 a year. That puts the cost at $34 billion, split between the federal government and states who participate. Community college presidents across the country are drooling.

Remember, the blame for skyrocketing college costs has been laid squarely at the feet of bloating administrative staff in higher education. One study states from early 2014 states administrative staff led to a 28 percent boom in the higher education workforce, even in the middle of this recession (while faculty salaries remained fairly flat). Community colleges actually lost both part-time and full-time faculty members during the recession, but nevertheless gained an average of three administrative positions per 1,000 students.

Continued in article

Jensen Comment
The "Free Tuition" program will add new flood levels to the current false promise rivers for most running toward community colleges. My worry is that the curricula of community colleges will be biased toward scholarly tracks that are not good deals for most of the students that will be lured into taking this "Free Tuition" route. Most of these curricula will be geared for getting students into advanced years of college for which they have poor abilities, aptitudes, and motivation.

The "Free Tuition" money for many of these students would be better spent on preparing them for skilled trades that have better career prospects than the majority of them have with bachelor degrees. In Germany only the top 25% of high school graduates are admitted into colleges. Most of the others are steered into outstanding vocational programs having a combination of vocational schooling and on-the-job apprenticeships.

It would be great if the community colleges receiving the taxpayer subsidy focused on vocational curricula with tremendous apprenticeship opportunities. This probably won't happen in USA community colleges, because it's more difficult and costly to create the German model in our present community colleges. Instead community colleges will do what they don't do a very good job at already --- the unattainable dream of prepare most community college students to become great college-level scholars. Meanwhile up here in the White Mountains having to pay nearly $100 per hour for not-so-great carpetners, plumbers and heating system mechanics.

In Germany and the rest of Europe educators realize that that the goal of education should not be that of turning out an oversupply of lackluster scholars. The goal should be that of turning out people more prepared to meet the supply and demand needs of a fantastic labor force. To the extent they want to become scholars as well there are countless free self-learning alternatives in this age of the Internet.

January 9, 2015 reply form Amy Haas

As a CUNY community college professor of Accounting, Bob, I agree 100% with you.

Very few of my students have either the motivation, skills or aptitude for an academic track. But there we are trying to fit square pegs into round holes. It's frustrating for both the student and the teacher! This program will just be more of the same. High school students need alternative paths, the academic road is not one size fits all.

Amy Haas, Professor, KBCC, Brooklyn, NY.

Bob Jensen's threads on grade inflation ---

What European and North American consumers spend the most versus the least for water?

"America's Got A Water Problem," by Cyntia Barnett, Ensia, January 11, 2015 ---

"Has the Economy Grown, or Just the Government?" by Mike Shedlock, Townhall, January 9, 2015 ---

Jensen Comment
Note how Shedlock documents the changed argument of Paul Krugman.

Some of our biggest names in economics are still pessimistic ---

"Five Years Later: Where Did All the Haiti Aid Go? Five years after the earthquake, nobody can claim it was mainly Haitians who squandered the money," by Raymond A. Joseph, The Wall Street Journal, January 9, 2015 ---

Hosting The 2024 Olympics Would Be A Waste For Boston ---

"Illinois Introduces Automatic (not mandatory) Retirement Savings Program, a First for the Nation," by Josh Barrow, The New York Times, January 5, 2015 ---

Illinois is taking a novel approach to getting its residents to save for retirement. Starting in 2017, most state residents with jobs who don’t already have a retirement plan at work will be automatically enrolled in individual retirement accounts, funded through a 3 percent deduction from their paychecks.

The program will be created under a law signed by Gov. Pat Quinn on Sunday. Participation will be voluntary, but workers who don’t want to save will need to opt out manually. (They will also be allowed to save more than 3 percent if they wish.) An estimate produced by the plan’s backers found that up to two million of the state’s residents may end up with the accounts.

Continued in article

The Biggest Flaw Of 'The Obama Team' ---

"How Can Scandinavians Tax So Much?," by Henrik Jacobsen Kleven (Professor at the London School of Economics), July 20, 2014

How can Scandinavian countries raise large amount s of tax revenue for redistribution and social insurance while maintaining some of the strongest economic outcomes in the world? Combining micro and macro evidence, this pa per identifies three policies that can help explain this apparent anomaly: the coverage of third-party information reporting (ensuring a low level of tax evasion), the broadness of tax bases (ensuring a low level of tax avoidance), and the strong subsidization of goods that are complementary to working (ensuring a high level of labor force participation). The paper also presents descriptive evidence on a variety of social and cultural indicators that may help in explaining the economic and social success of Scandinavia.

American visitors to Scandinavian countries are often puzzled by what they see: despite large income redistribution through distortionary taxe s and transfers, these are very high-income countries. They rank among the highest in the world in terms of income per capita, as well as most other economic and social outcomes. The economic and social success of Scandinavia poses important questions for economics and for those arguing against large redistribution based on its supposedly detrimental e ff ect on economic growth and welfare.

To form a basis for the discussion, Table 1 shows tax revenues and income tax rates in the three Scandinavian countries—Denmark, Norway and Sweden—as compared to other European countries and the United States. We see that the tax-to-GDP ratio and the tax rates on income are much higher in Scandinavia than elsewhere. The top marginal tax rates are about 60-70% in the Scandinavian countries as opposed to only 43% in the United States . The contrast is even more striking when considering the so-called “participation tax rate”, i.e. the effective average tax rate on labor force participation when accounting for the distortions due to income taxes, payroll taxes, consumption taxes, and means-tested transfers. This tax rate is around 80% in the Scandinavian countries, implying that an average worker entering employment will be able to increase consumption by only 20% of her earned income due to the combined effect of higher taxes and lower transfers. By contrast, the average worker in the United States gets to keep 63% of her earnings when accounting for the full im pact of the tax and welfare system.

This paper asks how Scandinavian countries are able to impose very hi gh tax rate s and still perform strongly on measures of tax compliance a nd real activity. Are ther e specific features of policy design that can account for this combination of outcomes? Or is there something special about Scandinavians that make them less responsive to a given set of distortionary tax and transfer policies. If policy choices can largely explain th e positive mixture of economic and social outcomes in Scandinavia, this may have important policy implications for societies where large inequality has been justified by growth consider ations. If not, those opposing more redistribution may rest assured that Scandinavia is a special case th at cannot be replicated elsewhere.

The next three sections of this paper consider three dimensions of policy design that can shed light on these questions. First, the Scandinavian tax systems have very wide coverage of third- party information reporting and mo re generally, well-developed information trails that ensure a low level of tax evasion . Second, broad tax bases in these countries further encourages low levels of tax avoidance and contribute to modest elasticities of taxable income with respect to the marginal tax rate. Third, the subsidization or public provision of goods that are complementary to working— including child care, elderly care, transportation, and education—encourages a high level of labor supply . Such public provision of labor complement s implies that the effective labor supply distortions are less severe than implied by th e tax-transfer distortions shown in Table 1.

We also explore the hypothesis that “Scandinavians are different” by considering cross-country evidence on social and cultural influences. Much of the public debate on these issues is based on a notion that social motivations such as morals, norms, and trust may vary across countries in a way that can explain international patterns in economic outcomes. We consider cross-country correlations between tax take and proxies for so cial motivations.

Continued in article

Jensen Comment
Scandinavia keeps better track of immigrants and their employment and taxation. In the USA we lose track of tens of millions of undocumented workers staying here permanently, working in the underground economy, and collecting free benefits like education and medical care.

My point is that comparing Scandinavia is a lot like comparing apples and horses. But there are many lessons to be learned. I might note that Scandinavia, like most other nations, discovered that taking almost everything from the high income earners for redistribution was dysfunctional. The marginal rates for top earners were lowered to less than 70% from their former 90%+ levels in Scandinavia.

From http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Distribution

In the United States, a progressive tax system is employed which equates to higher income earners paying a larger percentage of their income in taxes. According to the IRS, the top 1% of income earners for 2008 paid 38% of income tax revenue, while earning 20% of the income reported. The top 5% of income earners paid 59% of the total income tax revenue, while earning 35% of the income reported. The top 10% paid 70%, earning 46% and the top 25% paid 86%, earning 67%. The top 50% paid 97% (of total imcome tax collected), earning 87% and leaving the bottom 50% paying 3% of the taxes collected and earning 13% of the income reported.

Comparisons of top marginal tax rates between the USA and Scandinavia are a bit misleading until you also factor in the benefits of health insurance, college education, and other freebies in Scandinavia that have to be paid by high income Americans in addition to their taxes. Also the USA takes a much heavier bite in property taxes in addition to income taxes from high income earners, especially on high-valued homes, to pay for schools and municipal services. Property taxes in Sweden, for example, account for only 2.4% of total tax revenue whereas in the USA the take is 12.2% according to Table 1 at
Consumption taxes are higher in Sweden, but these are regressive in that the lower income people are taxed more heavily.

USA taxation will probably never be comparable to other nations until the USA comes to grips with its enormous trillion-dollar underground cash economy that is not subject to taxation. It will probably never be comparable until the USA stops providing free military services to much of the outside world and fighting the wars between other nations.

Case Studies in Gaming the Income Tax Laws ---

Are over 1/3  of the adult population of the USA not interested in being in the work force?
Record 92,898,000 Americans (aged 16 and over) Not In The Workforce

Jensen Comment
This is one way to mislead with statistics. A huge proportion of that 93 million Americans supposedly not in the work force are really in the work force. A huge proportion of them are working and drawing tax-free wages in the $2 trillion underground cash economy, including legitimate work that's not reported (e.g., house cleaners) and illegal work (e.g., drug dealing and other crimes) ---

Secondly there are a high proportion of Americans who do not want to work or cannot work. Millions get lifetime disability pensions. More millions have partners or parents earning enough income for financial support.

From the CFO Journal's Morning Ledger on January 6, 2015

2015 Outlook on Power and Utilities

2015 is the year for power and utility companies to chart their course to growth and returns, according to John McCue, a vice chairman and the U.S. Energy & Resources leader at Deloitte LLP. Mr. McCue discusses current trends in renewable energy, the maturing retail energy marketplace and energy efficiency sector, and next steps in the industry's transformation, including state-level regulatory shifts that could enable new paths to profitability.

Continue Reading Today's Article

Read more Deloitte Insights

ISIS Reportedly Executed Nearly 2,000 People In 6 Months
Including 120 of its own fighters who tried to return home and 930 Sunnis ---

ISIS is one of the darkest forces that any country has ever had to deal with.
"Inside the War Against Islamic State A retired four-star Marine Corps general, now the U.S. ‘special envoy’ in the war against the terrorist army, on reasons for optimism even as a long fight looms," by Joseph Rago, The Wall Street Journal, December 26, 2014 ---

Jensen Comment
This is a tremendous summary about the rise of ISIS and why we should all worry greatly about the dark forces of ISIS. One of the huge problems is that this enemy is not the least bit ashamed of fighting behind the shields of innocent civilians. Suppressing this evil means taking out innocent civilians. The other choice is unconditional global surrender to one force and one religion. Victory is not sweet and surrender is not an option except to people who not understand what surrender will ultimately entail.

This is probably terror without end between global combatants on all sides who will never surrender. There's no limit to the ultimate willingness to sacrifice others.


How much countries have donated to the Ebola fight, in one chart ---

The Beautiful Monarch Butterfly Is In Deep Trouble --- |

Charlie Hebdo’s most famous cartoons, translated and explained ---

The new USA Congress does not pass the ice bucket challenge
Meet the new Congress: Younger and more female, it’s still mainly lawyers and career politicians ---

How to mislead with statistics
The Most Dangerous States in America ---

Jensen Comment
I think California is the most dangerous state in America, but it does not make the "most dangerous" list. This in large measure is due to having the highest population denominator for percentage calculations.

California is dangerous because it has the most violent gang members and an increasing tendency to be lenient because of overstuffed prisons. California is also lenient in deporting many illegal alien criminals who most likely should go to prison. Most of them are back in California in less than a month.

California also has some of the most underfunded police departments in the USA, and this is showing up in crime statistics. Exhibit A is the bankrupt city of Stockton.

Ole yust does not yet vant Lena to be da boss
Women CEOs are rare in Norway and Sweden even though these nations are highest in terms of gender equality on other criteria

Chief Executive Officer (CEO) ---

. . .

In some European Union countries, there are two separate boards, one executive board for the day-to-day business and one supervisory board for control purposes (selected by the shareholders). In these countries, the CEO presides over the executive board and the chairman presides over the supervisory board, and these two roles will always be held by different people. This ensures a distinction between management by the executive board and governance by the supervisory board. This allows for clear lines of authority. The aim is to prevent a conflict of interest and too much power being concentrated in the hands of one person.

Women on Board The Norwegian Experience (June 2010) ---

Ole yust does not yet vant Lena to be da boss (Norway is not in the 28-Member European Union)
From the Harvard Business Review Blog on December 30, 2014

Norwegian Companies Morph to Avoid Gender-Balance Law

One of the consequences of Norway’s law mandating that at least 40% of the directors of public limited companies be female is that numerous firms have switched their organizational form, sometimes at significant cost, so that they are no longer public limited companies, say Øyvind Bøhren and Siv Staubo of Norwegian Business School. Among the companies in that category when the law was passed in 2003, 51% chose to become private limited-liability firms by the time it became binding five years later. However, Norway may further extend the board-representation rule to other corporate forms.

Does mandatory gender balance work? Changing organizational form to avoid board upheaval

Germany since passed quota (30% in 2016) legislation for publically-traded companies but rejected similar quotas for private corporations ---

Jensen Comment
In the USA the CEO generally has enormous power is choosing the slate of board members voted on by the shareholders. Also shareholders uninterested in voting often give voting proxies to the CEO. Hence the election of board members is not exactly an example of great democracy in action. For public relations purposes and for purposes of competency, however, CEOs are increasingly attempting to get women on corporate boards. Also corporate boards for sometimes complicated reasons, including competency, are increasingly trying to appoint women as CEOs.

Gender Equality --- http://en.wikipedia.org/wiki/Gender_equality

Global Gender Gap Report (2013) --- http://en.wikipedia.org/wiki/Global_Gender_Gap_Report

Gender Inequality Index --- http://en.wikipedia.org/wiki/Gender_Inequality_Index
Note that this index is based on multiple criteria and is not a measure of business executive power or executive compensation.

Female Labor Force in the Muslim World --- http://en.wikipedia.org/wiki/Female_labor_force_in_the_Muslim_world

Bob Jensen's threads on gender issues ---

Werner Herzog Plays Himself in Cartoon That Satirizes Obama’s 2008 Election & Race in America ---

After decades of tremendous electric output, Vermont bails out of nuclear power

Vermont's sole nuclear power plant ends operations ---

Jensen Comment
One of the big inhibitors to economic growth in northern New England is the high cost of electric power. Hydro alternatives from Quebec provide some relief, but this power is not cheap and the current plan building the "Northern Pass" big towers across New Hampshire will bypass most of northern New England in favor of the big urban markets in Connecticut and New York ---

Economist Magazine Goofs
"The Economist List Of The Most Influential Economists Is A Disaster," by Myles Upland, Business Insider, December 30, 2014 ---

Read Jesse Walker's excellent account of the rise and fall of Doonesbury—which has grown less skeptical of authority and less funny over the years—

Minnesotan who lived on yacht, collected aid, gets 21 months in prison ---

Doonesbury Somehow Unaware That the UVA Gang Rape Story Was Debunked Weeks Ago ---


"Your Taxpayer Tuition Bill:  First encourage more student debt, then promote nonpayment," The Wall Street Journal, December 30, 2014 ---

. . .

So-called income-based repayment programs reduce a borrower’s monthly payments and then forgive the remaining principal after a period of years. Graduates who choose the nonprofit and government jobs favored by the President can have their loans forgiven entirely after 10 years.

Mr. Delisle has dug into the government’s numbers and finds that the take-up rate of these nonpayment programs is far larger than most Americans appreciate. Two years ago the Administration’s estimate of the average amount to be forgiven in income-based repayment plans was already $41,000 per borrower. The total amount of forbearance loans is $125 billion, and rising. And even with all of these ways to avoid on-time repayment, borrowers are still defaulting at a rate of nearly 20%. The clear danger is that hundreds of billions of dollars will never be repaid, which means that future taxpayers will have to pick up the tab.

That may have been the plan all along, since Democrats have wanted to make college another federal entitlement. And conveniently for President Obama, the bill will come due after he has left office.

Bob Jensen's threads on the entitlements disaster ---

"The ‘Divergent’ World of 2015," by Niall Ferguson, The Wall Street Journal, January 2, 2014 ---

In Veronica Roth ’s “Divergent”—a 2011 “young adult” novel set in a dystopian future not a thousand miles removed from “The Hunger Games”—humanity is divided into five factions according to their dominant character traits: Abnegation, Amity, Candor, Dauntless and Erudite. This being a post-apocalyptic Chicago, the last faction turns out to be the bad guys. People who fail the initiation tests are consigned to poverty as “factionless.” People with multiple traits are classified as “divergent” and persecuted.

If you were to sort the world’s countries into five factions, you would need a slightly modified classification scheme. The U.S., its economic recovery firmly established despite learned talk of secular stagnation, is looking Dauntless. Then there are the Erudite little countries, like Estonia and Singapore, that have the rare distinction of intelligent governance. But the other three factions would need different names.

There are the Abject: from Argentina to Venezuela by way of Russia, corrupt pseudo-democracies reliant on the export of natural resources. There are the Aspirant: from India to Mexico and Peru, countries engaged in a real process of economic reform. And let’s not forget the Catatonic: from Japan to the eurozone, economies either immune to monetary stimulus or reluctant to administer it.

In truth, this is a Divergent world, with many countries—like Ms. Roth’s adolescent heroine, Tris—displaying more than one trait. Mexico would like to be Erudite but retains many traces of its Abject past. Japan is trying its best to be Aspirant, but Prime Minister Shinzo Abe can’t seem to fire his “third arrow” of structural reform. The U.K. would love to be Dauntless, but its economic turnaround lacks the breadth of the U.S. recovery, and political uncertainty around elections in May could prove distinctly daunting.

To understand the world in 2015, it may therefore be preferable to think of four trends that are divergent in the traditional sense. The first, and most obvious, is between the taperers and quantitative-easers in the realm of monetary policy. While the Federal Reserve and the Bank of England have been signaling their intention to “normalize” policy (i.e., to raise interest rates), the Bank of Japan has already launched an open-ended QE program, with the bank’s balance sheet projected to hit 70% of GDP. The European Central Bank, meanwhile, badly needs to reverse two years of balance-sheet contraction.

The second divergence is between exporters and importers of energy in the wake of a steep decline in global oil prices from over $100 a barrel as recently as July to just above $50 at year’s end. Assuming that energy prices do not bounce back in 2015, the outlook is as bleak for exporters as it is rosy for importers.

The third divergence is the political one between democracies and autocracies. The majority of democracies are now characterized by multiple parties, very close results and, consequently, relatively weak governments. In autocracies, by contrast, corrupt hierarchies are tightening their grip on power with old and new forms of coercion, ranging from police brutality in Venezuela to Internet trolling in Russia.

Finally, there is a fourth divergence between soft powers and hard powers. President Obama has shown a growing preference for European-style soft (he might say “smart”) power. Yet hard power is resilient. Having annexed Crimea to Russia, President Putin still has forces camped out in eastern Ukraine. And all over the Muslim world, myriad Islamist organizations, from Islamic State to the Taliban, are using violence to pursue their atavistic goals. In practice, the Obama administration has had little choice but to keep using hard power, from the airstrikes on Islamic State to the economic sanctions on Russia.

What will be the biggest consequences as these four divergences interact in 2015?

Perhaps the most important question relates to the country hardest to categorize: China. In many ways, China fended off the effects of the American financial crisis by turning a little bit American. After 2009 we saw a proliferation in China of shadow banks, a credit splurge and a real-estate bubble. Now the bust is here, followed by the inevitable financial distress, with colorfully named casualties like China Credit Equals Gold #1 and Henan Swiftly Soaring Investment.

True, there is unlikely to be a Chinese “Lehman moment.” Rather than let a big bank go bust, the Chinese would rather arrest, try and shoot the CEO. But deflationary pressures are building in an economy characterized by widespread urban and industrial overcapacity. So a key question for 2015 is how much the People’s Bank of China will ease in response. The bank cut rates in November. On Christmas Day it relaxed the restriction on the loan-to-deposit ratio by including interbank deposits from nonbank financial institutions in the denominator without requiring additional reserves on such deposits. More measures like these, and we could see the Shanghai and Shenzhen markets enter bubble territory as small investors flee real-estate for stocks.

The second big question is what the consequences will be of the oil-price slump. At November’s OPEC meeting in Vienna, Saudi oil minister Ali al-Naimi said that although falling oil prices would be painful, losing customers to U.S. shale would be worse. Yet it is not clear that American producers will be the biggest victims of the oil-price slump. Thanks to efficiency gains, the break-even price for the median North American shale development is now $57 compared with $70 in summer 2013.

An Arab official gave the game away in Vienna when he reportedly said: “If in the process, you shave 30% off Iran’s income, fine. If in the process, you shave 30% off Russia’s income, fine.” Earlier this month the Iranians held a crisis meeting with the Saudis. “We asked the Saudis to help stop the price of oil slipping further,” said an Iranian source quoted in the Times of London. “They replied that Iran should adjust itself to the market and they were happy with the oil price.”

Unlike in the 1980s, when the U.S. clearly pressed the Saudis to cut oil prices to squeeze the Soviet Union, today the Saudis (and Emiratis) seem to be the geopolitical playmakers. Their targets are regimes—in particular Iran’s, but also Russia’s—that have been on the opposing side of the great sectarian war that is raging for control of the post-American Middle East. The essential question is: Can the Saudis hurt the Iranians more than the U.S. has been helping them by easing sanctions in its desperation for a nuclear deal? My bet is that the answer is yes—and that 2015 will see instability in Iran, Russia and Venezuela.

The bad news for authoritarian regimes like Iran’s is simultaneously good news for European democracies, nearly all of which are heavily reliant on imported gas and oil. Yet it is far from clear that EU governments will reap much political reward from cheaper energy.

Eight member states have national elections in 2015: Estonia, Finland, Greece, Poland, Portugal, Slovenia, Spain and the U.K. In most cases, incumbents will struggle to secure re-election. We live in an era when close elections tend to be the rule, as more and more countries are multiparty systems and voters seem to prefer governments with wafer-thin majorities. The rise of populist parties, like Ukip in Britain, is making it harder for mainstream parties to muster majorities.

So this new year may well be one of minority governments—in Europe and in Israel and Canada. The exception to the rule will remain the U.S., where the two-party system looks immovably entrenched and the populists, from Ted Cruz to Elizabeth Warren , remain inside their respective political tents.

What, finally, of the geopolitical consequences of a Divergent world? This looks being a bad year for hard power as Russia wilts under the double punch of sanctions and cheap oil. There is also some reason to expect the Islamic State phenomenon to collapse under the weight of its own violence and incompetence. The trouble is that bad guys can also do soft power, as North Korea has apparently proved with the devastating hack of Sony Pictures. Islamic State, too, may have a bigger future as an online propaganda agency for Islamic extremism than as a wannabe caliphate.

Translating all such trend-following into smart investment decisions is never easy. In retrospect, equity investors last year should have shunned Europe and bought South Asia, the countries of the Middle East and North Africa (MENA), and the U.S. (Five markets were up over 20% in dollar terms: the Philippines, Indonesia, Israel, India and Egypt.) In fixed interest, emerging markets and corporates outperformed Treasurys, but a risk-free return of 4.7% on Treasurys was hard to complain about. Commodities were a no-go zone: not only oil but also gas, base metals and cotton. Who predicted all this? No one I know.

So how best to play the four divergences of 2015? The monetary-policy part seems simple: Stay long on the dollar, short the yen and euro. In energy, shun the high break-even exporters and any assets favored by “petro-crats” (yachts, high-end London homes). In politics, it’s hard to see any country that is going to have an Indian- or Indonesian-style positive transition as a result of elections this year. But I would stick with Mexico, despite elections that are bound to give the ruling PRI a bloody nose.

Finally, keep yourself hedged when it comes to energy prices. There is too much potential instability among too many MENA producers to warrant anything but caution.

Continued in article

Jensen Comment
Without being able to print its own currency to pay its debts, Greece is unlikely to meet its debt obligations even if it is bailed out yet again by the EU. Leaving the EU, however, will kill off Greek banks and cause soaring inflation. Greek is paying the price of once having a bloated public sector that was enormously inefficient with workers who did not work much at all.

"Germany Is Pretty Sure The Euro Zone Doesn't Need Greece," by Erik Kirschbaum, Reuters via Business Insider, January 4, 2015 ---

The German government believes that the euro zone would now be able to cope with a Greece exit if that proved to be necessary, Der Spiegel news magazine reported on Saturday, citing unnamed government sources.

Both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the euro zone has implemented enough reforms since the height of the regional crisis in 2012 to make a potential Greece exit manageable, Der Spiegel reported.

"The danger of contagion is limited because Portugal and Ireland are considered rehabilitated," the weekly news magazine quoted one government source saying.

In addition, the European Stability Mechanism (ESM), the euro zone's bailout fund, is an "effective" rescue mechanism and was now available, another source added. Major banks would be protected by the banking union.

The German government in Berlin could not be reached for comment.

It is still unclear how a euro zone member country could leave the euro and still remain in the European Union, but Der Spiegel quoted a "high-ranking currency expert" as saying that "resourceful lawyers" would be able to clarify.

According to the report, the German government considers a Greece exit almost unavoidable if the leftwing Syriza opposition party led by Alexis Tsipras wins an election set for Jan. 25.

The Greek election was called after lawmakers failed to elect a president last month. It pits Prime Minister Antonis Samaras' conservative New Democracy party, which imposed unpopular budget cuts under Greece's bailout deal, against Tsipras' Syriza, who want to cancel austerity measures and a chunk of Greek debt.

Opinion polls show Syriza is holding a lead over New Democracy, although its margin has narrowed to about three percentage points in the run-up to the vote.

German Finance Minister Schaeuble has already warned Greece against straying from a path of economic reform, saying any new government would be held to the pledges made by the current Samaras government

"Greek Exit Disaster...or Not," by Mike Shedlock, Townhall, January 4, 2015 ---

. . .

Where to Point the Finger When it Blows

The pot is simmering and is likely to boil over at any time. When it does boil over, Greece will not really be to blame, even if Alexis Tsipras wins the election and carries out his threats.

Rather, be prepared to point the finger at the EU, ECB, and IMF for their collective insistence that Greece, Spain, Italy, etc. repay debt that cannot and will not be paid back.

By the way, there is a small chance Tsipras wins the election and Greece exits the eurozone with limited initial fallout. If so, the major problem will come when Spain or Italy does the same thing.

Mike "Mish" Shedlock



"Supreme Court Battle Brewing Over Medicaid Fees," by Phil Galewitz, WebMD, January 12, 2015 ---

Rita Gorenflo’s 7-year-old son Nathaniel was in severe pain from a sinus infection.

But since the boy was covered by Medicaid, she couldn’t immediately find a specialist willing to see him. After days of calling, she was finally able to get Nathaniel an appointment nearly a week later near their South Florida home. That was in 2005.

Last month, ruling in a lawsuit brought by the state’s pediatricians and patient advocacy groups, a federal district judge in Miami determined Nathaniel’s wait was “unreasonable” and that Florida’s Medicaid program was failing him and nearly 2 million other children by not paying enough money to doctors and dentists to ensure the kids have adequate access to care.

The Florida case is the latest effort to get federal judges to force states to increase Medicaid provider payment rates for the state and federal program that covers about 70 million low-income Americans. In the past two decades, similar cases have been filed in numerous states, including California, Illinois, Massachusetts, Oklahoma, Texas and the District of Columbia– with many resulting in higher pay.

But while providers and patient advocates nationwide hailed the Florida decision, they are deeply worried about a U.S. Supreme Court case that they say could restrict their ability across the country to seek judicial relief from low Medicaid reimbursement rates.

The high court on Jan. 20 will hear a case from Idaho seeking to overturn a 2011 lower court order to increase payments to providers serving Medicaid enrollees with development disabilities. In the original case, five centers serving developmentally disabled adults and children argued that Idaho was unfairly keeping Medicaid reimbursement rates at 2006 levels despite studies showing that the cost of providing care had risen.

Idaho officials argue only the state and federal government should be able to set provider fees in Medicaid and all other “private parties,” including patients and providers, should not be able to use the court system to gain higher rates. Twenty-seven states and the Obama administration are supporting Idaho’s appeal, along with the National Governors Association.

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

"What '60 Minutes' Didn't Say: Hospitals Will Charge You More Under Obamacare," by Avik Roy, Forbes, January 12, 2015 ---

On Sunday evening, CBS’ 60 Minutes did a feature story on Steven Brill’s new book, America’s Bitter Pill, in which Brill complains that Obamacare didn’t do enough to tackle the exorbitantly high price of U.S. hospital care. “Obamacare does zero to change any of that,” says Brill. That’s not exactly right. What Brill—and CBS—don’t tell you—is that Obamacare is driving hospitals to charge you more than they already do.

The U.S. hospital industry is crony capitalism at its finest

Steven Brill, founder of The American Lawyer and Court TV took a starring role in the health care debate when he published the Time articleBitter Pill,” describing how hospitals charge extreme prices for ordinary care to the uninsured. For example, Sean Recchi, an uninsured lymphoma patient, went to MD Anderson Cancer Center, a world-renowned facility in Houston, to seek treatment. MD Anderson proceeded to charge him $283 for a $20 chest X-ray. They charged him more than $15,000 for blood tests costing a few hundred dollars. They charged him $13,702 for a dose of Rituxan, a lymphoma drug, for which the average U.S. hospital price is around $4,000. All told, Recchi’s course of treatment cost $83,900. Whatever he couldn’t pay was called “uncompensated care.”

MD Anderson is not struggling under the weight of bills unpaid by the uninsured. In 2010, MD Anderson recorded revenue of $2.05 billion and operating profits of $531 million. Brill recounted several other patients at other hospitals with similar stories.

This is a topic we’ve covered extensively at The Apothecary, and elsewhere: the U.S. hospital industry is the single largest example of crony capitalism in the history of civilization. In 2013, I wrote a piece for National Review calledAn Arm and a Legexplaining the problem.

To summarize: the average day spent in a U.S. hospital costs five times as much as it does in other industrialized countries. That’s not because U.S. hospitals use higher technology or better care. It’s because they charge more for the same technology and the same care. Because they can get away with it.

Obamacare subsidizes hospitals’ already-high prices

Thanks to federal intervention in the health care system—Medicare, Medicaid, and the employer tax exclusion—hospitals have been able to charge whatever they want for their services, knowing that the average consumer has no idea how much he’s paying, because he’s paying mostly through taxes and other indirect means.

In 2013, U.S. government entities—i.e., taxpayers—spent a half-trillion dollars subsidizing American hospitals. By 2021, thanks in part to Obamacare, that will grow to $800 billion a year. That’s more than twice what the military spends subsidizing the aerospace industry.

And here’s the thing. While Brill rightly criticizes Obamacare for not doing anything to bring down the cost of hospital care, he’s actually an ardent supporter of the law. And this is the fundamental problem with Brill’s thesis. Obamacare doesn’t merely not do anything to bring hospital costs down. It actively works to drive hospital costs upward, by doubling down on the incentives hospitals have to charge more to patients.

In every state, it’s the hospital industry that has been the principal lobbyist in support of Obamacare. Why? Because the law increases taxpayer subsidies of the hospital industry by around $400 billion per decade. In other words, it takes the currently high prices that U.S. hospitals charge and says “keep doing what you’re doing.”

If Obamacare had never passed, hospitals would have been under much more pressure to keep these costs down, because no one would be bailing them out if hospital care became increasingly unaffordable. The opposite, of course, has happened.

Obamacare encourages hospitals to increase their market power

The next thing Obamacare does is it encourages hospitals to merge, thereby giving hospitals even more market power to charge even higher prices. A study by Jamie Robinson of the University of California found that highly concentrated hospital markets–where one or two hospitals controlled most of the patient volume—hospitals charged an average of 41 percent more for common procedures than they did in more competitive markets.

Continued in article

The Health Care Market is Not a Market

"Video:  Inside ‘Bitter Pill’: Steven Brill Discusses His TIME Cover Story," Time Magazine, February 22, 2013 ---

Simple lab work done during a few days in the hospital can cost more than a car. A trip to the emergency room for chest pains that turn out to be indigestion brings a bill that can exceed the price of a semester at college. When we debate health care policy in America, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?

Steven Brill spent seven months analyzing hundreds of bill from hospitals, doctors, and drug companies and medical equipment manufacturers to find out who is setting such high prices and pocketing the biggest profits. What he discovered, outlined in detail in the cover story of the new issue of TIME, will radically change the way you think about our medical institutions:

· Hospitals arbitrarily set prices based on a mysterious internal list known as the “chargemaster.” These prices vary from hospital to hospital and are often ten times the actual cost of an item. Insurance companies and Medicare pay discounted prices, but don’t have enough leverage to bring fees down anywhere close to actual costs. While other countries restrain drug prices, in the United States federal law actually restricts the single biggest buyer—Medicare—from even trying to negotiate the price of drugs.

· Tax-exempt “nonprofit” hospitals are the most profitable businesses and largest employers in their regions, often presided over by the most richly compensated executives.

· Cancer treatment—at some of the most renowned centers such as Sloan-Kettering and M.D. Anderson—has some of the industry’s highest profit margins. Cancer drugs in particular are hugely profitable. For example, Sloan-Kettering charges $4615 for a immune-deficiency drug named Flebogamma. Medicare cuts Sloan-Kettering’s charge to $2123, still way above what the hospital paid for it, an estimated $1400.

· Patients can hire medical billing advocates who help people read their bills and try to reduce them. “The hospitals all know the bills are fiction, or at least only a place to start the discussion, so you bargain with them,” says Katalin Goencz, a former appeals coordinator in a hospital billing department who now works as an advocate in Stamford, CT.

Brill concludes:

The health care market is not a market at all.
It’s a crapshoot. Everyone fares differently based on circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid. If they’re not protected by Medicare or protected only partially by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow knew the prices before they got billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice. They are powerless buyers in a sellers’ market where the only consistent fact is the profit of the sellers.


"Bitter Pill:  Why Medical Bills Are Killing Us," Time Magazine Cover Story, March 4, 2013, pp. 16-65 (a very long article)  ---

"Yes, Hospital Pricing Is Insane, But Why? Time magazine issues a 24,000-word memo on what we already knew," by Holman Jenkins Jr., The Wall Street Journal, March 1, 2013 ---

Without diminishing the epic scope of Steven Brill's Time magazine piece about the U.S. health care system, he reiterates in lengthy detail perversities that are already well known, without offering a single useful insight on how it go that way, and even less on how to fix it.

Yet Mr. Brill, founder of CourtTV and American Lawyer magazine, author of books on terrorism and education, has written the longest piece in Time's history—24,000 words—so attention must be paid.

That health-care costs are inflated compared to what they would be in a reasonably transparent, competitive market (a point Mr. Brill never clearly makes) won't be a revelation. That hospitals allocate their costs to various items on their bills and price lists in ways that are opaque and arbitrary is not a new discovery either.

He finds it shocking that a hospital charging $1,791 a night won't throw in the generic Tylenol for free (instead charging $1.50 each). But this is to commit the reification fallacy of thinking there is some organic relationship between what a hospital charges for a particular item and what that item costs in the first place.

He dwells on the irrationality of hospitals charging their highest prices to their poorest customers, those without insurance. But he's also aware that these customers often pay little or nothing of what they are charged and hospitals reallocate the cost to the bills of other patients. He even notes that a hospital might collect as little as 18% of what it bills.

He vaguely gets that hospital price lists are memos for the file, to be drawn out and waved as a reference in negotiations with their real customers, the big health-care insurers, Medicaid, Medicare and other large payers.

The deals hammered out with these customers tend naturally to gravitate toward round numbers, leaving a hospital free to allocate its costs and profits to specific items however it wants. Mr. Brill may be offended that certain "non-profit" hospitals appear to be highly profitable. He probably wouldn't be happier, though, if they diverted their surplus revenues into even higher salaries and more gleamingly superfluous facilities.

"What is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?" Mr. Brill asks. But his question is rhetorical since he doesn't exhibit much urge to understand why the system behaves as it does, treating its nature as a given.

In fact, what he describes—big institutions dictating care and assigning prices in ways that make no sense to an outsider—is exactly what you get in a system that insulates consumers from the cost of their health care.

Your time might be better spent reading Duke University's Clark Havighurst in a brilliant 2002 article that describes the regulatory, legal and tax subsidies that deprive consumers of both the incentive and opportunity to demand value from medical providers. Americans end up with a "Hobson's choice: either coverage for 'Cadillac' care or no health coverage at all."

"The market failure most responsible for economic inefficiency in the health-care sector is not consumers' ignorance about the quality of care," Mr. Havighurst writes, "but rather their ignorance of the cost of care, which ensures that neither the choices they make in the marketplace nor the opinions they express in the political process reveal their true preferences."

You might turn next to an equally fabulous 2001 article by Berkeley economist James C. Robinson, who shows how the "pernicious" doctrine that health care is different—that consumers must shut up, do as they're told and be prepared to write a blank check—is used to "justify every inefficiency, idiosyncrasy, and interest-serving institution in the health care industry."

Hospitals, insurers and other institutions involved in health care may battle over available dollars, but they also share an interest in increasing the nation's resources being diverted into health care—which is exactly what happens when costs are hidden from those who pay them.

Continued in article

Jensen Comment
Over a year ago Erika's Medicare-Anthem summary of charges for the month included an $11,376 charge for out patient surgery that was mistakenly billed to her account. We called our doctor who did the procedure in the hospital. Our doctor responded not to bother her or the hospital --- since Medicare-Anthem paid the entire bill it would not matter.

This bothered us since the woman (I assume it was a woman) may not have been eligible for Medicare-Anthem. So I phoned Medicare. Medicare said not to bother them and advised us to contact the hospital where the procedure took place. Any corrections should be made by the hospital and the doctor.

So I called the hospital's accounting office. They asked that I send in a copy of the Medicare-Anthem report. I hand-delivered the report to the the hospital accounting office --- which is miles from the hospital.

Over the ensuing year we waited for a corrected Medicare-Anthem report. Nothing! So I did a follow up visit to the hospital's accounting office. The feedback was that since Medicare-Anthem paid the bill there was no need to waste time correcting this item.

I keep thinking that some woman not eligible for Medicare got a windfall gain here. Who cares if it was Medicare-Anthem that got screwed?

Erika and I changed to a doctor that we like better. But we cannot change hospitals.

Moral of the Story
If the third party insurer gets billed mistakenly or pays too much nobody cares, least of all the doctors and hospitals who got reimbursed.

Who is telling a lie?

Steven Brill wrote a long cover story for Time Magazine, In that story he describes having his team examine eight very complicated hospital bills from different hospitals. In every case they found that the bills were laced with errors and overcharges in favor of the hospital and possible frauds.
Bitter Pill:  Why Medical Bills Are Killing Us," Time Magazine Cover Story, March 4, 2013, pp. 16-65 (a very long article)  ---

The following week Stamford Hospital CEO Brian G. Grissler replied as shown, in part, below. Steven Brill's reply to Grissler, Time Magazine, March 18, 2013, Page 2.

Brian G. Grissler
". . . Brill refused to share the patient's name or the complete bill, so we are unable to answer those questions . . . "

Steven Brill Responds
"Stamford Hospital was shown the bill and never disputed its authenticity. I made clear in the article the hospital settled for cutting its bill entirely in half."

Jensen Comment
There are four possibilities behind this dispute:

  1. Brian Grissler could be lying through his teeth.

  2. Brian Grissler may not have thoroughly investigated the ultimate resolution of this bill by his staff.

  3. Steven Brill could be lying through his teeth.

  4. Steven Brill and Brian Grissler may not be discussing the same bill (although Brill claims he only picked one bill to examine from Stamford Hospital).

My vote is that Answer 1 above is probably the correct answer, but we most likely will never know.

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

"Taxes, Charitable Gifts, the ACA, and Ineffective Deadlines," by Howard Gleckman, Forbes, December 30, 2014 ---

Scrambling to make a last-minute charitable donation to beat the New Year’s Eve deadline for a 2014 tax deduction? Take a deep breath and ask yourself, “Why am I going through this craziness now?” Why is an activity that is largely (though not entirely) tax-motivated built around the end of the calendar year rather than tax filing season?

The same kind of deadline problem afflicts the open enrollment season for health insurance purchased through the Affordable Care Act. For many people, signing up for ACA insurance is also a tax-driven activity. Their subsidies are based on income they report on their tax returns. Taxpayers pay penalties for not having coverage by having their refunds reduced. And for many low- and moderate-income households considering insurance, those refunds represent a significant source of income. And people with more money in their pockets at tax time are more likely to spend it (in this case, on insurance).

Yet this year’s open enrollment season runs from Nov. 15, 2014 through Feb. 15, 2015. And the Obama Administration wants to make it even earlier next year—Oct. 1 through Dec. 15, long before tax filing season.

Changing the sign-up period is a great idea, but the Administration is headed in exactly the wrong direction. If it wants to maximize participation, it should move the sign-up period to coincide with filing season. Why lock in the same bad timing that already plagues charitable giving?

We have gotten so used to this year-end scramble that we think it is natural. But step back a bit and you see how dumb it really is.

Charities understand the importance of tax-motivated giving. And they know we often respond to deadlines (even non-itemizers give at year-end even though they get no tax benefit). So we are inundated with solicitations aimed explicitly at getting us to contribute in time to take that 2014 tax deduction.

But in many ways, this is the worst possible time for charities to ask for money. Givers are distracted by holiday travel, parties, and guests. And many are cash-poor, having spent much of their disposable income on holiday gifts, and the afore-mentioned travel, parties, and guests.

Sure, we do give around this time. One study reports that 22 percent of online donations are made on the last two days of December, says my Tax Policy Center colleague Gene Steuerle. But we very well might give even more if we could align our tax-deductible giving with tax filing season.

Continued in article

The 5 Most Common Health Insurance Exemptions -- and Who Qualifies ---

Cadillac Tax --- http://en.wikipedia.org/wiki/Cadillac_insurance_plan
Unions used their political connections to exempt themselves from the whopping Cadillac tax on luxury health plans

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

Say What?
Harvard Faculty Upset Over Obamacare's Impact


"Harvard Ideas on Health Care Hit Home, Hard," by Robert Pearjan, The New York Times, January 5, 2015 ---

For years, Harvard’s experts on health economics and policy have advised presidents and Congress on how to provide health benefits to the nation at a reasonable cost. But those remedies will now be applied to the Harvard faculty, and the professors are in an uproar.

Members of the Faculty of Arts and Sciences, the heart of the 378-year-old university, voted overwhelmingly in November to oppose changes that would require them and thousands of other Harvard employees to pay more for health care. The university says the increases are in part a result of the Obama administration’s Affordable Care Act, which many Harvard professors championed. Continue reading the main story Related Coverage

Roberto Villacreses of Sunshine Life and Health Advisors with Darko Tomelic and Andrea Viteri recently at a Miami mall. Health Insurance Enrollment Strongest in Federal MarketplaceDEC. 30, 2014 Agents from Sunshine Life and Health Advisors helped customers sign up for health care in Miami this month. So Far, 6.4 Million Obtain Health Care Coverage for 2015 in Federal MarketplaceDEC. 23, 2014 Obama Administration to Investigate Insurers for Bias Against Costly ConditionsDEC. 22, 2014

The faculty vote came too late to stop the cost increases from taking effect this month, and the anger on campus remains focused on questions that are agitating many workplaces: How should the burden of health costs be shared by employers and employees? If employees have to bear more of the cost, will they skimp on medically necessary care, curtail the use of less valuable services, or both?

Harvard is a microcosm of what’s happening in health care in the country,” said David M. Cutler, a health economist at the university who was an adviser to President Obama’s 2008 campaign. But only up to a point: Professors at Harvard have until now generally avoided the higher expenses that other employers have been passing on to employees. That makes the outrage among the faculty remarkable, Mr. Cutler said, because “Harvard was and remains a very generous employer.”

In Harvard’s health care enrollment guide for 2015, the university said it “must respond to the national trend of rising health care costs, including some driven by health care reform,” in the form of the Affordable Care Act. The guide said that Harvard faced “added costs” because of provisions in the health care law that extend coverage for children up to age 26, offer free preventive services like mammograms and colonoscopies and, starting in 2018, add a tax on high-cost insurance, known as the Cadillac tax.

Richard F. Thomas, a Harvard professor of classics and one of the world’s leading authorities on Virgil, called the changes “deplorable, deeply regressive, a sign of the corporatization of the university.”

Mary D. Lewis, a professor who specializes in the history of modern France and has led opposition to the benefit changes, said they were tantamount to a pay cut. “Moreover,” she said, “this pay cut will be timed to come at precisely the moment when you are sick, stressed or facing the challenges of being a new parent.”

The university is adopting standard features of most employer-sponsored health plans: Employees will now pay deductibles and a share of the costs, known as coinsurance, for hospitalization, surgery and certain advanced diagnostic tests. The plan has an annual deductible of $250 per individual and $750 for a family. For a doctor’s office visit, the charge is $20. For most other services, patients will pay 10 percent of the cost until they reach the out-of-pocket limit of $1,500 for an individual and $4,500 for a family.

Previously, Harvard employees paid a portion of insurance premiums and had low out-of-pocket costs when they received care.

Michael E. Chernew, a health economist and the chairman of the university benefits committee, which recommended the new approach, acknowledged that “with these changes, employees will often pay more for care at the point of service.” In part, he said, “that is intended because patient cost-sharing is proven to reduce overall spending.”

The president of Harvard, Drew Gilpin Faust, acknowledged in a letter to the faculty that the changes in health benefits — though based on recommendations from some of the university’s own health policy experts — were “causing distress” and had “generated anxiety” on campus. But she said the changes were necessary because Harvard’s health benefit costs were growing faster than operating revenues or staff salaries and were threatening the budget for other priorities like teaching, research and student aid.

In response, Harvard professors, including mathematicians and microeconomists, have dissected the university’s data and question whether its health costs have been growing as fast as the university says. Some created spreadsheets and contended that the university’s arguments about the growth of employee health costs were misleading. In recent years, national health spending has been growing at an exceptionally slow rate.

In addition, some ideas that looked good to academia in theory are now causing consternation. In 2009, while Congress was considering the health care legislation, Dr. Alan M. Garber — then a Stanford professor and now the provost of Harvard — led a group of economists who sent an open letter to Mr. Obama endorsing cost-control features of the bill. They praised the Cadillac tax as a way to rein in health costs and premiums.

Dr. Garber, a physician and health economist, has been at the center of the current Harvard debate. He approved the changes in benefits, which were recommended by a committee that included university administrators and experts on health policy.

In an interview, Dr. Garber acknowledged that Harvard employees would face greater cost-sharing, but he defended the changes. “Cost-sharing, if done appropriately, can slow the growth of health spending,” he said. “We need to be prepared for the very real possibility that health expenditure growth will take off again.”

But Jerry R. Green, a professor of economics and a former provost who has been on the Harvard faculty for more than four decades, said the new out-of-pocket costs could lead people to defer medical care or diagnostic tests, causing more serious illnesses and costly complications in the future.

“It’s equivalent to taxing the sick,” Professor Green said. “I don’t think there’s any government in the world that would tax the sick.”

Meredith B. Rosenthal, a professor of health economics and policy at the Harvard School of Public Health, said she was puzzled by the outcry. “The changes in Harvard faculty benefits are parallel to changes that all Americans are seeing,” she said. “Indeed, they have come to our front door much later than to others.”

But in her view, there are drawbacks to the Harvard plan and others like it that require consumers to pay a share of health care costs at the time of service. “Consumer cost-sharing is a blunt instrument,” Professor Rosenthal said. “It will save money, but we have strong evidence that when faced with high out-of-pocket costs, consumers make choices that do not appear to be in their best interests in terms of health.”

Harvard’s new plan is far more generous than plans sold on public insurance exchanges under the Affordable Care Act. Harvard says its plan pays 91 percent of the cost of services for the covered population, while the most popular plans on the exchanges, known as silver plans, pay 70 percent, on average, reflecting their "actuarial value.”

"None of us who protested was motivated by our own bottom line so much as by the principle,” Ms. Lewis said, expressing concern about the impact of the changes on lower-paid employees.

In many states, consumers have complained about health plans that limit their choice of doctors and hospitals. Some Harvard employees have said they will gladly accept a narrower network of health care providers if it lowers their costs. But Harvard’s ability to create such networks is complicated by the fact that some of Boston’s best-known, most expensive hospitals are affiliated with Harvard Medical School. To create a network of high-value providers, Harvard would probably need to exclude some of its own teaching hospitals, or discourage their use.

“Harvard employees want access to everything,” said Dr. Barbara J. McNeil, the head of the health care policy department at Harvard Medical School and a member of the benefits committee. “They don’t want to be restricted in what institutions they can get care from.”

Although out-of-pocket costs over all for a typical Harvard employee are to increase in 2015, administrators said premiums would decline slightly. They noted that the university, which has an endowment valued at more than $36 billion, had an unusual program to provide protection against high out-of-pocket costs for employees earning $95,000 a year or less. Still, professors said the protections did not offset the new financial burdens that would fall on junior faculty and lower-paid staff members.

Continued in article

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