The Case for Present Health Reform Legislation

At the link below you will find a one-page .pdf, remarks by Andy Kurz at a rally held at the Chicago Temple on February 24, 2010. It was the eve of President Obama's Healthcare Summit. Andy told us in plain English what there is to like in the coming reform.

As I post this, House debate on the reconciliation bill is winding down to a close. - Hal

Good evening. My name is Andy Kurz, I’m retired and on Medicare. My 42 year career included over 12 years of executive level finance and risk management, including CFO for Blue Cross & Blue Shield of Wisconsin... I am not here tonight to convince you the bill is good, far from it. I am here to say that this bill is necessary, and in context, as transformational as Medicare was in 1965. (more)

Health Care Reform: Separating The Wheat From The Chaff

by Andrew Kurz and Miles Zaremski

The article at the link is intended as a fresh look at health care reform, presenting the main points and distilling more than 2,000 pages of legislation into fewer than 2,500 words. The tone is dispassionate; this is not a critique of political efforts to date. Over a dozen issues are identified where there is broad agreement. A die-hard critic may find more common ground than meets the eye.

The President reminds us that, after nearly a century of trying, we are closer than ever to achieving health care reform. A look at the core issues, presented as civil discourse and shorn of distractions, may create the needed consensus.

Health Care Reform: Separating The Wheat From The Chaff

Has the Senate Ruined Health Care Reform?

In a special commentary tonight, Keith Olbermann said of the present Senate compromise, "this is not health, this is not care, this is certainly not reform." Howard Dean, Wendell Potter, Anthony Wiener, and Bernie Sanders are warning that the present bill may do more harm than good. Glenn Greenwald was even more jaded, saying, "The administration wants not only to prevent industry money from funding an anti-health-care-reform campaign, but also wants to ensure that the Democratic Party -- rather than the GOP -- will continue to be the prime recipient of industry largesse."

On the other hand, we have progressive senators Sherrod Brown and Tom Harkin supporting the bill and John Podesta offering his top ten reasons why progressives should support the Senate bill. Andy Kurz, a frequent guest on this blog, says:

While many are disappointed at the compromises finding their way into the Senate bill, there are still many good reforms that deserve passage of the bill.

Here is Andy's complete 2-page memo.

IL Attorney General Lisa Madigan: Don't Preempt State Regulatory Power

Two amendments were re-introduced in the U.S. House Rules Committee on Monday that will seriously undermine needed finance reform. Amendment #88, sponsored by Walter Minnick (ID) and others, would completely do away with the proposed Consumer Finance Protection Agency (CFPA); Amendment #141, sponsored by Melissa Bean (IL) and others, would hamstring regulatory efforts at the state level.

Background: You will find an update on the overall financial reform package, the Wall Street Reform and Consumer Protection Act (H.R. 4173), here: In the Public Interest: Rein in the Financial System That Failed. The toxic amendments are discussed here: Rep. Minnick Proposes Scrapping CFPA, Embraces Chamber’s Consumer Protection Model. Elizabeth Warren, head of the Congressional Oversight Panel, explains why American needs a Consumer Financial Protection Agency in the video at this page: Reining In Wall Street.

Yesterday, on a conference call hosted by Americans for Financial Reform, Illinois Attorney General Lisa Madigan explained why financial reform is so important and why the amendment re-introduced by Illinois Representative Melissa Bean should be withdrawn a second time. The main part of Attorney General Madigan's remarks appear below:

Let me give you the perspective of a state Attorney General. I have been Illinois State Attorney general for nearly seven years. Since taking office on January 1, 2003, I have had to focus on protecting people, borrowers and homeowners, from unfair, deceptive and discriminatory mortgage lending practices.

Since I have been the Attorney General, we have investigated some of the largest sub-prime lenders in the country: in 2003 Household Finance, in 2006 Ameriquest, in 2007 and 2008 it was Countrywide, and in 2009 Wells Fargo. After uncovering and documenting their predatory lending practices, we have either settled with or sued all those companies just mentioned, for putting people into loans that they didn't understand and they couldn't afford. In many ways we have had to out of my office do all that we possibly can to keep people in Illinois in their homes.

To give you just a quick perspective on that, I set up a homeowners'  help line about a year and a half ago and we have had approximately 19,000 Illinois homeowners call us about problems with their loans, trying to stay in their homes and trying to get modifications. We're looking at right now, and I think these numbers are only through October, 140,000 foreclosure filings in the state; like every other state, the highest number in years.

So I don't think that anyone at this point disputes that the practices of sub-prime lenders led to the foreclosure crisis, which ultimately was at the heart of our country's financial collapse. As an Attorney General I also am able to put in perspective that over the last 15 years, as we have seen state enforcement authority preempted, we have seen a rise of these predatory lending practices. I also don't think that anybody who knows the history would dispute that the only people bringing enforcement actions to hold lenders accountable and to try to save people's homes were state Attorneys General. We repeatedly tried to warn the feds about what was going on in our home states, in our communities, but regulators were blocking our efforts. And then, in addition to that, they did nothing to prevent the economic disaster that ensued.

We responded, and by "we" I mean not just the Illinois Attorney General's office but, we as state Attorneys General, and state banking regulators, and state legislatures across the country. We've responded not just with lawsuits but also with laws to protect and prevent the situation from happening again. Because the fed's didn't recognize or didn't want to respond, ultimately, as we all are painfully aware, American taxpayers, so the same people who are losing their jobs and are losing their homes, have had to bail out the financial services industry to the tune of 700 billion dollars last year.

I give that as background because it makes it very clear that the need for a CFPA has never been more apparent. The consumers need their interests considered and protected. It cannot just be a situation where banking regulators get to determine what is best for all of us because their priority is, what is best for a bank. And far too often we have seen that what is best for a bank may not be and has not been what is best for consumers and what is best for our economy.

Ed also mentioned as we all know many of those entities whose actions perpetrated this economic meltdown are fighting the creation of the CFPA and they are fighting the critical role that state Attorneys General and state banking regulators play in protecting their residents from abusive lending practices. Some of the amendments that are being proposed would limit state Attorney General authority and ability to bring lawsuits as well as to pass tougher laws in response to clearly abusive practices.

So, two points I want to leave you with:

1. Don't preempt state Attorneys General. There needs to be state level enforcement, particularly when the feds don't act. And it's a situation that the feds shouldn't be the ones intermediating what states decide to do vis-a-vis banks and lenders.

2. States need the ability to legislate to protect their residents when they see a clear problem. That goes the point about how the federal rules and the federal laws need to be a floor and not a ceiling, so we can legislate above if necessary as has been the case during this lending crisis.

What's going on now with some of these amendments is an attempt to prevent us from doing that. As others have said, there is no question that the current system of consumer protection failed. And in the end, financial reform is about restoring responsibility and accountability to our financial system. And it is about making sure that our financial system serves the interests of hard-working families and individuals and not just those of the big banks.

Support our Attorneys General and give some muscle to state regulators. Support H.R.4173. Call for defeat or withdrawal of Minnick and Bean amendments. Call your congressperson today and tomorrow and every day until the debate is over.

Non-Partisan CBO Estimates of Health Care Reform

Latest big-picture analysis of health care history and proposed reform from insurance/finance insider Andy Kurz (bio here).

SUMMARY: Few doubt how unsustainable current medical trends are. With medical inflation consistently outpacing the CPI, health costs will continue to take a greater share of the economy. Private insurers claim they can solve the problem with reform but without a Public Option. History suggests this is a dubious claim at best. Looked at from multiple angles, private insurers are not likely to succeed. Profits gains have far exceeded key indices, medical loss ratios have gone way down, while costs have gone way up, competition is diminished by concentration of major insurers, and tort reform complaints carry little water.

Full report here.

Illinois Needs Health Insurance Reform

A new report from Health Care for America Now (HCAN) summarizes the need for reform and expected benefits from pending reform in House and Senate. Sources are provided for  the stats, so you can fact-check the report.

Health insurance reform will reduce the deficit by $138 billion over the next 10 years, and Illinois families will see reductions in premium costs of up to $3,000 a year. Currently, 1.8 million Illinoisans do not have health insurance, and if nothing is done, this will increase to 2.3 million by 2019. Health insurance reform will allow the uninsured to get coverage and help the 612,000 Illinois residents who currently purchase individual insurance to buy an affordable health plan. Health insurance reform will help Illinois families, seniors, small businesses, and the state.

Full report here.

Public Option Has No Cost

(Revised 12/3/09) Retired insurance CFO Andy Kurz (short bio) is always looking for new ways to put health care numbers and proposed reforms in perspective. The chart below is his latest creation. Click the image to view the chart; there is also a pdf with a second page explaining calculations.

Executive Summary:

Americans can be divided into three health groups. About 3 in 10 people are on government run Medicare/Medicaid. Four in 10 work in big business and 3 in 10 work in small business or are uninsured. Much health insurance for big business is run just like Medicare where insurers administer claims but incur no claims risk. The middle group, small business and individuals incur the brunt of “at risk” insurance that is higher cost. Those higher costs put this group at a cost disadvantage to big business.

The Public Option has no effect on big business. But most new jobs come from small business, where higher health costs create a disincentive to hire. That in turn, hinders economic growth. A non profit Public Option eliminates high profit margins from insurance and puts small business on a more level playing field with big business. Since Public Option must play by the same rules, it is unlikely to put private insurers out of business. Only a strong Public Option with a broad enrollment base will compel insurers to compete.

Comments by the author:

This whole public option is not the boogeyman that some make it out to be. The diagram puts people of the U.S. into three main groups:Medicare and Medicaid recipients, insured by large employer, and eligible for proposed Insurance Exchange. For the largest, big business, it's business as usual, for several years at least.

I added a small table to show how health care costs are extremely skewed. If you are among the 90% of population, no worries, and why care at all about reform. You should care because if you become the 1 in 10, or 1 in 100, the consequences could be absolutely devastating health care costs. Kind of an eye opener, thanks to Kaiser Foundation for the stats.

Links for page 2:

Kaiser Foundation: Trends in Health Care Costs and Spending, March 2009

Centers for Medicare and Medicaid Services: Total Personal Health Care Expenditures by Type of Service, Region, and State of Residence: Calendar Year 2004

U.S. Census Bureau: Population, Population change and estimated components of population change: April 1, 2000 to July 1, 2008 (NST-EST2008-alldata)

U.S. Census Bureau: Statistics about Business Size (including Small Business)